Delaware (State or Other Jurisdiction of Incorporation) |
1-5805 (Commission File Number) |
13-2624428 (IRS Employer Identification No.) |
||
270 Park Avenue, New York, NY (Address of Principal Executive Offices) |
10017 (Zip Code) |
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release First Quarter 2010 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement First Quarter 2010 |
2
JPMORGAN CHASE & CO. (Registrant) |
||||
By: | /s/ Louis Rauchenberger | |||
Louis Rauchenberger | ||||
Managing Director and Controller [Principal Accounting Officer] |
||||
3
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release First Quarter 2010 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement First Quarter 2010 |
4
Three months ended March 31, (in millions, except ratios) |
2010 | |||
Excluding interest on deposits |
||||
Income before income tax expense |
$ | 4,537 | ||
Fixed charges: |
||||
Interest expense |
2,291 | |||
One-third of rents, net of income from subleases (a) |
146 | |||
Total fixed charges |
2,437 | |||
Add: Equity in undistributed loss of affiliates |
29 | |||
Income before income tax expense and fixed charges,
excluding capitalized interest |
$ | 7,003 | ||
Fixed charges, as above |
$ | 2,437 | ||
Ratio of earnings to fixed charges |
2.87 | |||
Including interest on deposits |
||||
Fixed charges, as above |
$ | 2,437 | ||
Add: Interest on deposits |
844 | |||
Total fixed charges and interest on deposits |
$ | 3,281 | ||
Income before income tax expense and fixed charges,
excluding capitalized interest, as above |
$ | 7,003 | ||
Add: Interest on deposits |
844 | |||
Total income before income tax expense,
fixed charges and interest on deposits |
$ | 7,847 | ||
Ratio of earnings to fixed charges |
2.39 | |||
(a) | The proportion deemed representative of the interest factor. |
Three months ended March 31, (in millions, except ratios) |
2010 | |||
Excluding
interest on deposits |
||||
Income before income tax expense |
$ | 4,537 | ||
Fixed charges: |
||||
Interest expense |
2,291 | |||
One-third of rents, net of income from subleases (a) |
146 | |||
Total fixed charges |
2,437 | |||
Add: Equity in undistributed loss of affiliates |
29 | |||
Income before income tax expense and fixed charges,
excluding capitalized interest |
$ | 7,003 | ||
Fixed charges, as above |
$ | 2,437 | ||
Preferred stock dividends (pre-tax) |
240 | |||
Fixed charges including preferred stock dividends |
$ | 2,677 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
2.62 | |||
Including interest on deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 2,677 | ||
Add: Interest on deposits |
844 | |||
Total fixed charges including preferred stock dividends and interest on deposits |
$ | 3,521 | ||
Income before income tax expense and fixed charges,
excluding capitalized interest, as above |
$ | 7,003 | ||
Add: Interest on deposits |
844 | |||
Total income before income tax expense,
fixed charges and interest on deposits |
$ | 7,847 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
2.23 | |||
(a) | The proportion deemed representative of the interest factor. |
JPMorgan Chase & Co. 270 Park Avenue, New York, NY 10017-2070 NYSE symbol: JPM |
||
www.jpmorganchase.com |
| Investment Bank generated strong net income and Fixed Income Markets revenue |
| Ranked #1 in Global Investment Banking Fees | ||
| Credit costs were a benefit of $462 million, driven by repayments and loan sales |
| Solid results from other businesses, including Asset Management, Commercial Banking and Retail Banking | ||
| Consumer credit trends for Chase portfolios showed improvement in delinquencies |
| Card Services credit costs included $1.0 billion reserve reduction | ||
| Home Lending credit costs included $1.2 billion reserve increase for Washington Mutual credit-impaired portfolios |
| Corporate results included $1.0 billion in trading and securities gains and $2.3 billion in additional litigation reserves, including those for mortgage-related matters | ||
| Balance sheet remained very strong: Tier 1 Capital of $131.4 billion, or 11.5%, and Tier 1 Common1 of $104.0 billion, or 9.1% (estimated) | ||
| More than $145 billion in new credit provided during the quarter, with continued focus on preventing foreclosures: |
| 4.0 million new card, home equity, mortgage and auto loans | ||
| Small-business credit originations of $2.1 billion across all businesses | ||
| 64,000 permanent mortgage modifications approved during the quarter; more than 750,000 modifications offered and nearly 185,000 approved since beginning of 2009 |
Investor Contact: Lauren Tyler (212) 270-7325 | Media Contact: Joe Evangelisti (212) 270-7438 |
2
Results for IB | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 8,319 | $ | 4,929 | $ | 8,371 | $ | 3,390 | 69 | % | ($52 | ) | (1 | )% | ||||||||||||||
Provision for
Credit Losses |
(462 | ) | (181 | ) | 1,210 | (281 | ) | (155 | ) | (1,672 | ) | NM | ||||||||||||||||
Noninterest Expense |
4,838 | 2,286 | 4,774 | 2,552 | 112 | 64 | 1 | |||||||||||||||||||||
Net Income |
$ | 2,471 | $ | 1,901 | $ | 1,606 | $ | 570 | 30 | % | $ | 865 | 54 | % |
| Ranked #1 in Global Investment Banking Fees for the three months ended March 31, 2010, according to Dealogic. | ||
| Ranked #1 in Global Debt, Equity and Equity-related; #1 in Global Equity and Equity-related; #3 in Global Long-Term Debt; #1 in Global Syndicated Loans; and #5 in Global Announced M&A, based on volume, for the three months ended March 31, 2010, according to Dealogic. | ||
| Return on equity was 25% on $40.0 billion of average allocated capital. | ||
| End-of-period loans retained were $53.0 billion, down 20% from the prior year and up 16% from the prior quarter, driven by the consolidation of asset-backed commercial paper conduits. End-of-period fair-value and held-for-sale loans were $3.6 billion, down 67% from the prior year and flat to the prior quarter, driven largely by reductions in leveraged loan exposure. |
3
Results for RFS | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 7,776 | $ | 7,669 | $ | 8,835 | $ | 107 | 1 | % | ($1,059 | ) | (12 | )% | ||||||||||||||
Provision for Credit Losses |
3,733 | 4,229 | 3,877 | (496 | ) | (12 | ) | (144 | ) | (4 | ) | |||||||||||||||||
Noninterest Expense |
4,242 | 4,302 | 4,171 | (60 | ) | (1 | ) | 71 | 2 | % | ||||||||||||||||||
Net Income/(Loss) |
($131 | ) | ($399 | ) | $ | 474 | $ | 268 | 67 | % | ($605 | ) | NM |
4
| Checking accounts totaled 25.8 million, up 3% from the prior year and flat compared with the prior quarter. | ||
| Average total deposits were $333.9 billion, down 3% from the prior year, due to the maturity of time deposits acquired in the Washington Mutual transaction, and up 1% from the prior quarter. | ||
| Deposit margin was 3.02%, compared with 2.85% in the prior year and 3.06% in the prior quarter. | ||
| Average Business Banking and other loans were $16.9 billion, down 8% from the prior year and 2% from the prior quarter; originations were $905 million, up 96% from the prior year and 35% from the prior quarter. | ||
| Branch sales of credit cards decreased 16% from the prior year, but increased 8% from the prior quarter. | ||
| Branch sales of investment products increased 35% from the prior year partially driven by significantly increased sales in the Washington Mutual footprint, and increased 2% from the prior quarter. | ||
| Overhead ratio (excluding amortization of core deposit intangibles) was 58%, compared with 58% in the prior year and 55% in the prior quarter. | ||
| Number of branches was 5,155, down 1% from the prior year and flat compared with the prior quarter. |
5
| Mortgage loan originations were $31.7 billion, down 16% from the prior year and 9% from the prior quarter. | ||
| Total third-party mortgage loans serviced were $1.1 trillion, a decrease of $73.8 billion, or 1%, from the prior quarter. | ||
| Average auto loans were $46.9 billion, up 10%; originations were $6.3 billion, up 13% from the prior year and 7% from the prior quarter. |
| Average mortgage loans were $124.4 billion, down by $17.0 billion. The total included $3.6 billion reflecting the consolidation of loans in accordance with new accounting guidance, effective January 1, 2010. | ||
| Average home equity loans were $125.7 billion, down by $16.1 billion. Home equity originations were $302 million, down 67% from the prior year and 25% from the prior quarter. |
6
Results for CS | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 4,447 | $ | 5,148 | $ | 5,129 | ($701 | ) | (14 | )% | ($682 | ) | (13 | )% | ||||||||||||||
Provision for Credit Losses |
3,512 | 4,239 | 4,653 | (727 | ) | (17 | ) | (1,141 | ) | (25 | ) | |||||||||||||||||
Noninterest Expense |
1,402 | 1,396 | 1,346 | 6 | | 56 | 4 | |||||||||||||||||||||
Net Loss |
($303 | ) | ($306 | ) | ($547 | ) | $ | 3 | 1 | % | $ | 244 | 45 | % |
| Return on equity was negative 8% on $15 billion of average allocated capital. | ||
| Pretax income to average managed loans (ROO) was negative 1.22%, compared with negative 1.92% in the prior year and negative 1.18% in the prior quarter. |
7
| Net interest income as a percentage of average managed loans was 9.60%, down from 9.91% in the prior year and 10.36% in the prior quarter. Excluding the impact of the Washington Mutual transaction, the ratio was 8.86%. | ||
| New accounts of 2.5 million were opened. | ||
| Sales volume was $69.4 billion, an increase of $2.8 billion, or 4%. Excluding the impact of the Washington Mutual transaction, sales volume was $66.9 billion, an increase of $4.4 billion, or 7%. | ||
| Merchant processing volume was $108.0 billion on 4.7 billion total transactions processed. |
Results for CB | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,416 | $ | 1,406 | $ | 1,402 | $ | 10 | 1 | % | $ | 14 | 1 | % | ||||||||||||||
Provision for Credit Losses |
214 | 494 | 293 | (280 | ) | (57 | ) | (79 | ) | (27 | ) | |||||||||||||||||
Noninterest Expense |
539 | 543 | 553 | (4 | ) | (1 | ) | (14 | ) | (3 | ) | |||||||||||||||||
Net Income |
$ | 390 | $ | 224 | $ | 338 | $ | 166 | 74 | % | $ | 52 | 15 | % |
8
| Overhead ratio was 38%, down from 39%. | ||
| Gross investment banking revenue (which is shared with the Investment Bank) was $311 million, up by $105 million, or 51%. | ||
| Average loan balances were $96.6 billion, down by $17.3 billion, or 15%, from the prior year, and $3.6 billion, or 4%, from the prior quarter. | ||
| End-of-period loan balances were $95.7 billion, down by $15.5 billion, or 14%, from the prior year, and $1.7 billion, or 2%, from the prior quarter. | ||
| Record average liability balances were $133.1 billion, up by $18.2 billion, or 16%, from the prior year and $10.7 billion, or 9%, from the prior quarter. |
Results for TSS | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,756 | $ | 1,835 | $ | 1,821 | ($79 | ) | (4 | )% | ($65 | ) | (4 | )% | ||||||||||||||
Provision for Credit Losses |
(39 | ) | 53 | (6 | ) | (92 | ) | NM | (33 | ) | NM | |||||||||||||||||
Noninterest Expense |
1,325 | 1,391 | 1,319 | (66 | ) | (5 | ) | 6 | | |||||||||||||||||||
Net Income |
$ | 279 | $ | 237 | $ | 308 | $ | 42 | 18 | % | ($29 | ) | (9 | )% |
| Pretax margin1 was 25%, down from 26% in the prior year and up from 20% in the prior quarter. | ||
| Return on equity was 17% on $6.5 billion of average allocated capital. | ||
| Average liability balances were $247.9 billion, down 10%. | ||
| Assets under custody were $15.3 trillion, up 13%. | ||
| International electronic funds transfer volumes were 55.8 million, up 26%. |
9
Results for AM | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 2,131 | $ | 2,195 | $ | 1,703 | ($64 | ) | (3 | )% | $ | 428 | 25 | % | ||||||||||||||
Provision for Credit Losses |
35 | 58 | 33 | (23 | ) | (40 | ) | 2 | 6 | |||||||||||||||||||
Noninterest Expense |
1,442 | 1,470 | 1,298 | (28 | ) | (2 | ) | 144 | 11 | |||||||||||||||||||
Net Income |
$ | 392 | $ | 424 | $ | 224 | ($32 | ) | (8 | )% | $ | 168 | 75 | % |
| Pretax margin1 was 31%, up from 22%. | ||
| Assets under management reflected net outflows of $40 billion for the quarter and $27 billion for the 12 months ended March 31, 2010. | ||
| Assets under management ranked in the top two quartiles for investment performance were 77% over 5-years, 67% over 3-years and 55% over 1-year. | ||
| Customer assets in 4 and 5 Starrated funds were 43%. | ||
| Average loans were $36.6 billion, up by $2.0 billion, or 6%. | ||
| End-of-period loans were $37.1 billion, up 9% from the prior year and down 2% from the prior quarter. | ||
| Average deposits were $80.7 billion down 1% from the prior year and up 4% from the prior quarter. |
10
Results for Corporate/Private | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
Equity ($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 2,357 | $ | 2,084 | ($309 | ) | $ | 273 | 13 | % | $ | 2,666 | NM | |||||||||||||||
Provision for Credit Losses |
17 | 9 | | 8 | 89 | 17 | NM | |||||||||||||||||||||
Noninterest Expense |
2,336 | 616 | (88 | ) | 1,720 | 279 | 2,424 | NM | ||||||||||||||||||||
Net Income/(Loss) |
$ | 228 | $ | 1,197 | ($262 | ) | ($969 | ) | (81 | )% | $ | 490 | NM |
Results for JPM | 4Q09 | 1Q09 | ||||||||||||||||||||||||||
($ millions) | 1Q10 | 4Q09 | 1Q09 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 28,172 | $ | 25,236 | $ | 26,922 | $ | 2,936 | 12 | % | $ | 1,250 | 5 | % | ||||||||||||||
Provision for Credit Losses |
7,010 | 8,901 | 10,060 | (1,891 | ) | (21 | ) | (3,050 | ) | (30 | ) | |||||||||||||||||
Noninterest Expense |
16,124 | 12,004 | 13,373 | 4,120 | 34 | 2,751 | 21 | |||||||||||||||||||||
Net Income |
$ | 3,326 | $ | 3,278 | $ | 2,141 | $ | 48 | 1 | % | $ | 1,185 | 55 | % |
11
offset by a
| Tier 1 Capital ratios were 11.5% at March 31, 2010 (estimated), 11.1% at December 31, 2009, and 11.4% at March 31, 2009. | ||
| Tier 1 Common ratios were 9.1% at March 31, 2010 (estimated), 8.8% at December 31, 2009, and 7.3% at March 31, 2009. | ||
| Headcount was 226,623, an increase of 7,054, or 3%. |
12
1. | Notes on non-GAAP financial measures: |
a. In addition to analyzing the Firms results on a reported basis, management analyzes the Firms results and the results of the lines of business on a managed basis, which is a non-GAAP financial measure. For 2010 and 2009, the Firms definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue and net interest income for the Firm (and each of the business segments) on a tax-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. | |
Effective January 1, 2010, the Firm adopted the new accounting guidance for consolidating VIEs and consolidated the assets and liabilities of its firm-sponsored credit card securitization trusts. The income, expense and credit costs associated with these securitization activities are now recorded in the 2010 Consolidated Statements of Income in the same classifications as for credit card loans that were not securitized. As a result of the consolidation of the securitization trusts, reported and managed basis are equivalent for periods beginning after January 1, 2010. Prior to January 1, 2010 the Firms managed basis presentation also included certain reclassification adjustments that assumed credit card loans securitized by Card Services remained on the Consolidated Balance Sheet. JPMorgan Chase used this concept of managed basis prior to January 1, 2010 to evaluate the credit performance and overall financial performance of the entire managed credit card portfolio as operations were funded and decisions were made about allocating resources, such as employees and capital, based on such managed financial information. In addition, the same underwriting standards and ongoing risk monitoring are used for both loans on the Consolidated Balance Sheet and securitized loans. Although securitizations result in the sale of credit card receivables to a trust, JPMorgan Chase retained the ongoing customer relationships, as the customers may continue to use their credit cards; accordingly, the customers credit performance affects both the securitized loans and the loans retained on the Consolidated Balance Sheet. JPMorgan Chase believed that this managed basis information was useful to investors, as it enabled them to understand both the credit risks associated with the loans reported on the Consolidated Balance Sheet and the Firms retained interests in securitized loans. | |
b. The allowance for loan losses to end-of-period loans excludes purchased credit-impaired loans and loans from the Washington Mutual Master Trust, which were consolidated on the Firms balance sheet at fair value during the second quarter of 2009. Additionally, Real Estate Portfolios net charge-off rates exclude the impact of purchased credit-impaired loans. The allowance for loan losses applicable to these loans was $2.8 billion at March 31, 2010. | |
c. Tier 1 Common Capital (Tier 1 Common) is defined as Tier 1 Capital less elements of capital not in the form of common equity such as qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred capital debt securities. Tier 1 Common, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. The Firm uses Tier 1 Common along with the other capital measures to assess and monitor its capital position. | |
d. Headcount-related expense includes salary and benefits (excluding performance-based incentives), and other noncompensation costs related to employees. | |
e. TSS firmwide revenue includes certain TSS product revenue and liability balances reported in other lines of business, mainly CB, RFS and AM, related to customers who are also customers of those lines of business. | |
f. Pretax margin represents income before income tax expense divided by total net revenue, which is, in managements view, a comprehensive measure of pretax performance derived by measuring earnings after all costs are taken into consideration. It is, therefore, another basis that management uses to evaluate the performance of TSS and AM against the performance of their respective competitors. |
13
14
JPMORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share, ratio and headcount data) |
QUARTERLY TRENDS | ||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: | 1Q10 | 4Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||
Reported Basis |
||||||||||||||||||||
Total net revenue |
$ | 27,671 | $ | 23,164 | $ | 25,025 | 19 | % | 11 | % | ||||||||||
Total noninterest expense |
16,124 | 12,004 | 13,373 | 34 | 21 | |||||||||||||||
Preprovision profit (a) |
11,547 | 11,160 | 11,652 | 3 | (1 | ) | ||||||||||||||
Provision for credit losses |
7,010 | 7,284 | 8,596 | (4 | ) | (18 | ) | |||||||||||||
Income/(loss) before extraordinary gain |
3,326 | 3,278 | 2,141 | 1 | 55 | |||||||||||||||
Extraordinary gain |
| | | | | |||||||||||||||
NET INCOME |
3,326 | 3,278 | 2,141 | 1 | 55 | |||||||||||||||
Managed Basis (b) |
||||||||||||||||||||
Total net revenue |
$ | 28,172 | $ | 25,236 | $ | 26,922 | 12 | 5 | ||||||||||||
Total noninterest expense |
16,124 | 12,004 | 13,373 | 34 | 21 | |||||||||||||||
Preprovision profit (a) |
12,048 | 13,232 | 13,549 | (9 | ) | (11 | ) | |||||||||||||
Provision for credit losses |
7,010 | 8,901 | 10,060 | (21 | ) | (30 | ) | |||||||||||||
Income/(loss) before extraordinary gain |
3,326 | 3,278 | 2,141 | 1 | 55 | |||||||||||||||
Extraordinary gain |
| | | | | |||||||||||||||
NET INCOME |
3,326 | 3,278 | 2,141 | 1 | 55 | |||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||
Basic Earnings |
||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.75 | 0.75 | 0.40 | | 88 | |||||||||||||||
Net income |
0.75 | 0.75 | 0.40 | | 88 | |||||||||||||||
Diluted Earnings |
||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.74 | 0.74 | 0.40 | | 85 | |||||||||||||||
Net income |
0.74 | 0.74 | 0.40 | | 85 | |||||||||||||||
Cash dividends declared |
0.05 | 0.05 | 0.05 | | | |||||||||||||||
Book value |
39.38 | 39.88 | 36.78 | (1 | ) | 7 | ||||||||||||||
Closing share price |
44.75 | 41.67 | 26.58 | 7 | 68 | |||||||||||||||
Market capitalization |
177,897 | 164,261 | 99,881 | 8 | 78 | |||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,994.7 | 3,974.1 | 3,758.7 | 1 | 6 | |||||||||||||||
Common shares outstanding at period-end |
3,975.4 | 3,942.0 | 3,757.7 | 1 | 6 | |||||||||||||||
FINANCIAL RATIOS: (c) |
||||||||||||||||||||
Income/(loss) before extraordinary gain: |
||||||||||||||||||||
Return on
common equity (ROE) |
8 | % | 8 | % | 5 | % | ||||||||||||||
Return on tangible common equity (ROTCE)
(d) |
12 | 12 | 8 | |||||||||||||||||
Return on assets (ROA) |
0.66 | 0.65 | 0.42 | |||||||||||||||||
Net income: |
||||||||||||||||||||
ROE |
8 | 8 | 5 | |||||||||||||||||
ROTCE (d) |
12 | 12 | 8 | |||||||||||||||||
ROA |
0.66 | 0.65 | 0.42 | |||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||
Tier 1 capital ratio |
11.5 | (f) | 11.1 | 11.4 | ||||||||||||||||
Total capital ratio |
15.1 | (f) | 14.8 | 15.2 | ||||||||||||||||
Tier 1 common capital ratio (e) |
9.1 | (f) | 8.8 | 7.3 | ||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||
Total assets |
$ | 2,135,796 | (g) | $ | 2,031,989 | $ | 2,079,188 | 5 | 3 | |||||||||||
Wholesale loans |
214,290 | (g) | 204,175 | 242,284 | 5 | (12 | ) | |||||||||||||
Consumer loans |
499,509 | (g) | 429,283 | 465,959 | 16 | 7 | ||||||||||||||
Deposits |
925,303 | 938,367 | 906,969 | (1 | ) | 2 | ||||||||||||||
Common stockholders equity |
156,569 | (g) | 157,213 | 138,201 | | 13 | ||||||||||||||
Total stockholders equity |
164,721 | (g) | 165,365 | 170,194 | | (3 | ) | |||||||||||||
Headcount |
226,623 | 222,316 | 219,569 | 2 | 3 | |||||||||||||||
LINE OF BUSINESS NET INCOME/(LOSS) |
||||||||||||||||||||
Investment Bank |
$ | 2,471 | $ | 1,901 | $ | 1,606 | 30 | 54 | ||||||||||||
Retail Financial Services |
(131 | ) | (399 | ) | 474 | 67 | NM | |||||||||||||
Card Services |
(303 | ) | (306 | ) | (547 | ) | 1 | 45 | ||||||||||||
Commercial Banking |
390 | 224 | 338 | 74 | 15 | |||||||||||||||
Treasury & Securities Services |
279 | 237 | 308 | 18 | (9 | ) | ||||||||||||||
Asset Management |
392 | 424 | 224 | (8 | ) | 75 | ||||||||||||||
Corporate/Private Equity |
228 | 1,197 | (262 | ) | (81 | ) | NM | |||||||||||||
Net income |
$ | 3,326 | $ | 3,278 | $ | 2,141 | 1 | 55 | ||||||||||||
(a) | Preprovision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses. | |
(b) | For further discussion of managed basis, see Note a. on page 13. | |
(c) | Quarterly ratios are based upon annualized amounts. | |
(d) | Net income applicable to common equity divided by total average common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm uses return on tangible common equity, a non-GAAP financial measure, to evaluate the Firms use of equity and to facilitate comparisons with competitors. | |
(e) | The Tier 1 common ratio is Tier 1 common capital divided by risk-weighted assets. Tier 1 common capital (Tier 1 Common) is defined as Tier 1 capital less elements of capital not in the form of common equity such as perpetual preferred stock, noncontrolling interest in subsidiaries and trust preferred capital debt securities. Tier 1 common capital, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. | |
(f) | Estimated. | |
(g) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related, by adding approximately $87.6 billion and $92.1 billion of assets and liabilities, respectively, and decreasing stockholders equity by approximately $4.5 billion. |
15
Exhibit 99.2
Page | ||||
Consolidated Results |
||||
Consolidated Financial Highlights
|
2 | |||
Statements of Income
|
3 | |||
Consolidated Balance Sheets
|
4 | |||
Condensed Average Balance Sheets and Annualized Yields
|
5 | |||
Reconciliation from Reported to Managed Summary
|
6 | |||
Business Detail |
||||
Line of Business Financial Highlights Managed Basis
|
7 | |||
Investment Bank
|
8 | |||
Retail Financial Services
|
11 | |||
Card Services Managed Basis
|
18 | |||
Commercial Banking
|
21 | |||
Treasury & Securities Services
|
23 | |||
Asset Management
|
25 | |||
Corporate/Private Equity
|
28 | |||
Credit-Related Information
|
30 | |||
Market Risk-Related Information
|
35 | |||
Supplemental Detail |
||||
Capital, Intangible Assets and Deposits
|
36 | |||
Per Share-Related Information
|
37 | |||
Non-GAAP Financial Measures
|
38 | |||
Glossary of Terms
|
39 |
Page 1
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: |
||||||||||||||||||||||||||||
Reported Basis |
||||||||||||||||||||||||||||
Total net revenue |
$ | 27,671 | $ | 23,164 | $ | 26,622 | $ | 25,623 | $ | 25,025 | 19 | % | 11 | % | ||||||||||||||
Total noninterest expense |
16,124 | 12,004 | 13,455 | 13,520 | 13,373 | 34 | 21 | |||||||||||||||||||||
Preprovision profit (a) |
11,547 | 11,160 | 13,167 | 12,103 | 11,652 | 3 | (1 | ) | ||||||||||||||||||||
Provision for credit losses |
7,010 | 7,284 | 8,104 | 8,031 | 8,596 | (4 | ) | (18 | ) | |||||||||||||||||||
Income before extraordinary gain |
3,326 | 3,278 | 3,512 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
Extraordinary gain |
| | 76 | | | | | |||||||||||||||||||||
NET INCOME |
3,326 | 3,278 | 3,588 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
Managed Basis (b) |
||||||||||||||||||||||||||||
Total net revenue |
$ | 28,172 | $ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | 12 | 5 | ||||||||||||||||
Total noninterest expense |
16,124 | 12,004 | 13,455 | 13,520 | 13,373 | 34 | 21 | |||||||||||||||||||||
Preprovision profit (a) |
12,048 | 13,232 | 15,325 | 14,189 | 13,549 | (9 | ) | (11 | ) | |||||||||||||||||||
Provision for credit losses |
7,010 | 8,901 | 9,802 | 9,695 | 10,060 | (21 | ) | (30 | ) | |||||||||||||||||||
Income before extraordinary gain |
3,326 | 3,278 | 3,512 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
Extraordinary gain |
| | 76 | | | | | |||||||||||||||||||||
NET INCOME |
3,326 | 3,278 | 3,588 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||||||||||
Basic Earnings |
||||||||||||||||||||||||||||
Income before extraordinary gain |
0.75 | 0.75 | 0.80 | 0.28 | 0.40 | | 88 | |||||||||||||||||||||
Net income |
0.75 | 0.75 | 0.82 | 0.28 | 0.40 | | 88 | |||||||||||||||||||||
Diluted Earnings (c) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
0.74 | 0.74 | 0.80 | 0.28 | 0.40 | | 85 | |||||||||||||||||||||
Net income |
0.74 | 0.74 | 0.82 | 0.28 | 0.40 | | 85 | |||||||||||||||||||||
Cash dividends declared |
0.05 | 0.05 | 0.05 | 0.05 | 0.05 | | | |||||||||||||||||||||
Book value |
39.38 | 39.88 | 39.12 | 37.36 | 36.78 | (1 | ) | 7 | ||||||||||||||||||||
Closing share price |
44.75 | 41.67 | 43.82 | 34.11 | 26.58 | 7 | 68 | |||||||||||||||||||||
Market capitalization |
177,897 | 164,261 | 172,596 | 133,852 | 99,881 | 8 | 78 | |||||||||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,994.7 | 3,974.1 | 3,962.0 | 3,824.1 | 3,758.7 | 1 | 6 | |||||||||||||||||||||
Common shares outstanding at period-end |
3,975.4 | 3,942.0 | 3,938.7 | 3,924.1 | 3,757.7 | 1 | 6 | |||||||||||||||||||||
FINANCIAL RATIOS: (d) |
||||||||||||||||||||||||||||
Income before extraordinary gain: |
||||||||||||||||||||||||||||
Return on common equity (ROE) (c) |
8 | % | 8 | % | 9 | % | 3 | % | 5 | % | ||||||||||||||||||
Return on tangible common equity (ROTCE) (c) (e) |
12 | 12 | 13 | 5 | 8 | |||||||||||||||||||||||
Return on assets (ROA) |
0.66 | 0.65 | 0.70 | 0.54 | 0.42 | |||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||
ROE (c) |
8 | 8 | 9 | 3 | 5 | |||||||||||||||||||||||
ROTCE (c) (e) |
12 | 12 | 14 | 5 | 8 | |||||||||||||||||||||||
ROA |
0.66 | 0.65 | 0.71 | 0.54 | 0.42 | |||||||||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||||||||||
Tier 1 capital ratio |
11.5 | (g) | 11.1 | 10.2 | 9.7 | 11.4 | ||||||||||||||||||||||
Total capital ratio |
15.1 | (g) | 14.8 | 13.9 | 13.3 | 15.2 | ||||||||||||||||||||||
Tier 1 common capital ratio (f) |
9.1 | (g) | 8.8 | 8.2 | 7.7 | 7.3 | ||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Total assets |
$ | 2,135,796 | (h) | $ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | 5 | 3 | |||||||||||||||
Wholesale loans |
214,290 | (h) | 204,175 | 218,953 | 231,625 | 242,284 | 5 | (12 | ) | |||||||||||||||||||
Consumer loans |
499,509 | (h) | 429,283 | 434,191 | 448,976 | 465,959 | 16 | 7 | ||||||||||||||||||||
Deposits |
925,303 | 938,367 | 867,977 | 866,477 | 906,969 | (1 | ) | 2 | ||||||||||||||||||||
Common stockholders equity |
156,569 | (h) | 157,213 | 154,101 | 146,614 | 138,201 | | 13 | ||||||||||||||||||||
Total stockholders equity |
164,721 | (h) | 165,365 | 162,253 | 154,766 | 170,194 | | (3 | ) | |||||||||||||||||||
Headcount |
226,623 | 222,316 | 220,861 | 220,255 | 219,569 | 2 | 3 | |||||||||||||||||||||
LINE OF BUSINESS NET INCOME/(LOSS) |
||||||||||||||||||||||||||||
Investment Bank |
$ | 2,471 | $ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | 30 | 54 | ||||||||||||||||
Retail Financial Services |
(131 | ) | (399 | ) | 7 | 15 | 474 | 67 | NM | |||||||||||||||||||
Card Services |
(303 | ) | (306 | ) | (700 | ) | (672 | ) | (547 | ) | 1 | 45 | ||||||||||||||||
Commercial Banking |
390 | 224 | 341 | 368 | 338 | 74 | 15 | |||||||||||||||||||||
Treasury & Securities Services |
279 | 237 | 302 | 379 | 308 | 18 | (9 | ) | ||||||||||||||||||||
Asset Management |
392 | 424 | 430 | 352 | 224 | (8 | ) | 75 | ||||||||||||||||||||
Corporate/Private Equity |
228 | 1,197 | 1,287 | 808 | (262 | ) | (81 | ) | NM | |||||||||||||||||||
Net income |
$ | 3,326 | $ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | 1 | 55 | ||||||||||||||||
(a) | Preprovision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses. | |
(b) | For further discussion of managed basis, see Reconciliation from reported to managed summary on page 6. | |
(c) | The calculation of the second quarter 2009 earnings per share and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of Troubled Asset Relief Program (TARP) preferred capital. Excluding this reduction, the adjusted ROE and ROTCE for the second quarter 2009 would have been 6% and 10%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods. | |
(d) | Quarterly ratios are based upon annualized amounts. | |
(e) | Net income applicable to common equity divided by total average common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm uses return on tangible common equity, a non-GAAP financial measure, to evaluate the Firms use of equity and to facilitate comparisons with competitors. | |
(f) | The Tier 1 common ratio is Tier 1 common capital divided by risk-weighted assets. Tier 1 common capital (Tier 1 Common) is defined as Tier 1 capital less elements of capital not in the form of common equity such as perpetual preferred stock, noncontrolling interest in subsidiaries and trust preferred capital debt securities. Tier 1 common capital, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. | |
(g) | Estimated. | |
(h) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related, adding $87.6 billion and $92.1 billion of assets and liabilities, respectively, and decreasing stockholders equity by $4.5 billion. |
Page 2
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,461 | $ | 1,916 | $ | 1,679 | $ | 2,106 | $ | 1,386 | (24 | )% | 5 | % | ||||||||||||||
Principal transactions |
4,548 | 838 | 3,860 | 3,097 | 2,001 | 443 | 127 | |||||||||||||||||||||
Lending- and deposit-related fees |
1,646 | 1,765 | 1,826 | 1,766 | 1,688 | (7 | ) | (2 | ) | |||||||||||||||||||
Asset management, administration and commissions |
3,265 | 3,361 | 3,158 | 3,124 | 2,897 | (3 | ) | 13 | ||||||||||||||||||||
Securities gains |
610 | 381 | 184 | 347 | 198 | 60 | 208 | |||||||||||||||||||||
Mortgage fees and related income |
658 | 450 | 843 | 784 | 1,601 | 46 | (59 | ) | ||||||||||||||||||||
Credit card income |
1,361 | 1,844 | 1,710 | 1,719 | 1,837 | (26 | ) | (26 | ) | |||||||||||||||||||
Other income |
412 | 231 | 625 | 10 | 50 | 78 | NM | |||||||||||||||||||||
Noninterest revenue |
13,961 | 10,786 | 13,885 | 12,953 | 11,658 | 29 | 20 | |||||||||||||||||||||
Interest income |
16,845 | 15,615 | 16,260 | 16,549 | 17,926 | 8 | (6 | ) | ||||||||||||||||||||
Interest expense |
3,135 | 3,237 | 3,523 | 3,879 | 4,559 | (3 | ) | (31 | ) | |||||||||||||||||||
Net interest income |
13,710 | 12,378 | 12,737 | 12,670 | 13,367 | 11 | 3 | |||||||||||||||||||||
TOTAL NET REVENUE |
27,671 | 23,164 | 26,622 | 25,623 | 25,025 | 19 | 11 | |||||||||||||||||||||
Provision for credit losses |
7,010 | 7,284 | 8,104 | 8,031 | 8,596 | (4 | ) | (18 | ) | |||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
7,276 | 5,112 | 7,311 | 6,917 | 7,588 | 42 | (4 | ) | ||||||||||||||||||||
Occupancy expense |
869 | 944 | 923 | 914 | 885 | (8 | ) | (2 | ) | |||||||||||||||||||
Technology, communications and equipment expense |
1,137 | 1,182 | 1,140 | 1,156 | 1,146 | (4 | ) | (1 | ) | |||||||||||||||||||
Professional and outside services |
1,575 | 1,682 | 1,517 | 1,518 | 1,515 | (6 | ) | 4 | ||||||||||||||||||||
Marketing |
583 | 536 | 440 | 417 | 384 | 9 | 52 | |||||||||||||||||||||
Other expense (a) |
4,441 | 2,262 | 1,767 | 2,190 | 1,375 | 96 | 223 | |||||||||||||||||||||
Amortization of intangibles |
243 | 256 | 254 | 265 | 275 | (5 | ) | (12 | ) | |||||||||||||||||||
Merger costs |
| 30 | 103 | 143 | 205 | NM | NM | |||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
16,124 | 12,004 | 13,455 | 13,520 | 13,373 | 34 | 21 | |||||||||||||||||||||
Income before income tax expense and
extraordinary gain |
4,537 | 3,876 | 5,063 | 4,072 | 3,056 | 17 | 48 | |||||||||||||||||||||
Income tax expense (b) |
1,211 | 598 | 1,551 | 1,351 | 915 | 103 | 32 | |||||||||||||||||||||
Income before extraordinary gain |
3,326 | 3,278 | 3,512 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
Extraordinary gain (c) |
| | 76 | | | | | |||||||||||||||||||||
NET INCOME |
$ | 3,326 | $ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | 1 | 55 | ||||||||||||||||
DILUTED EARNINGS PER SHARE |
||||||||||||||||||||||||||||
Income before extraordinary gain (d) |
$ | 0.74 | $ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | | 85 | ||||||||||||||||
Extraordinary gain |
| | 0.02 | | | | | |||||||||||||||||||||
NET INCOME (d) |
$ | 0.74 | $ | 0.74 | $ | 0.82 | $ | 0.28 | $ | 0.40 | | 85 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
Income before extraordinary gain: |
||||||||||||||||||||||||||||
ROE (d) |
8 | % | 8 | % | 9 | % | 3 | % | 5 | % | ||||||||||||||||||
ROTCE (d) |
12 | 12 | 13 | 5 | 8 | |||||||||||||||||||||||
ROA |
0.66 | 0.65 | 0.70 | 0.54 | 0.42 | |||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||
ROE (d) |
8 | 8 | 9 | 3 | 5 | |||||||||||||||||||||||
ROTCE (d) |
12 | 12 | 14 | 5 | 8 | |||||||||||||||||||||||
ROA |
0.66 | 0.65 | 0.71 | 0.54 | 0.42 | |||||||||||||||||||||||
Effective income tax rate |
27 | 15 | 31 | 33 | 30 | |||||||||||||||||||||||
Overhead ratio |
58 | 52 | 51 | 53 | 53 | |||||||||||||||||||||||
EXCLUDING IMPACT OF MERGER COSTS (e) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
$ | 3,326 | $ | 3,278 | $ | 3,512 | $ | 2,721 | $ | 2,141 | 1 | 55 | ||||||||||||||||
Merger costs (after-tax) |
| 18 | 64 | 89 | 127 | NM | NM | |||||||||||||||||||||
Income before extra. gain excl. merger costs |
$ | 3,326 | $ | 3,296 | $ | 3,576 | $ | 2,810 | $ | 2,268 | 1 | 47 | ||||||||||||||||
Diluted Per Share: |
||||||||||||||||||||||||||||
Income before extraordinary gain (d) |
$ | 0.74 | $ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | | 85 | ||||||||||||||||
Merger costs (after-tax) |
| 0.01 | 0.02 | 0.02 | 0.03 | NM | NM | |||||||||||||||||||||
Income before extra. gain excl. merger costs (d) |
$ | 0.74 | $ | 0.75 | $ | 0.82 | $ | 0.30 | $ | 0.43 | (1 | ) | 72 | |||||||||||||||
(a) | The second quarter of 2009 included a $675 million FDIC special assessment. | |
(b) | The income tax expense in the first quarter of 2010 and fourth quarter of 2009 includes tax benefits recognized upon the resolution of tax audits. | |
(c) | On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. The acquisition resulted in negative goodwill, and accordingly, the Firm recognized an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. | |
(d) | The calculation of the second quarter 2009 earnings per share and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE and ROTCE for the second quarter of 2009 would have been 6% and 10%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods. | |
(e) | Net income excluding merger costs, a non-GAAP financial measure, is used by the Firm to facilitate comparison of results against the Firms ongoing operations and with other companies U.S. GAAP financial statements. |
Page 3
March 31, 2010 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Mar 31 | ||||||||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||||||
ASSETS (a) |
||||||||||||||||||||||||||||
Cash and due from banks |
$ | 31,422 | $ | 26,206 | $ | 21,068 | $ | 25,133 | $ | 26,681 | 20 | % | 18 | % | ||||||||||||||
Deposits with banks |
59,014 | 63,230 | 59,623 | 61,882 | 89,865 | (7 | ) | (34 | ) | |||||||||||||||||||
Federal funds sold and securities purchased under
resale agreements |
230,123 | 195,404 | 171,007 | 159,170 | 157,237 | 18 | 46 | |||||||||||||||||||||
Securities borrowed |
126,741 | 119,630 | 128,059 | 129,263 | 127,928 | 6 | (1 | ) | ||||||||||||||||||||
Trading assets: |
||||||||||||||||||||||||||||
Debt and equity instruments |
346,712 | 330,918 | 330,370 | 298,135 | 298,453 | 5 | 16 | |||||||||||||||||||||
Derivative receivables |
79,416 | 80,210 | 94,065 | 97,491 | 131,247 | (1 | ) | (39 | ) | |||||||||||||||||||
Securities |
344,376 | 360,390 | 372,867 | 345,563 | 333,861 | (4 | ) | 3 | ||||||||||||||||||||
Loans |
713,799 | 633,458 | 653,144 | 680,601 | 708,243 | 13 | 1 | |||||||||||||||||||||
Less: Allowance for loan losses |
38,186 | 31,602 | 30,633 | 29,072 | 27,381 | 21 | 39 | |||||||||||||||||||||
Loans, net of allowance for loan losses |
675,613 | 601,856 | 622,511 | 651,529 | 680,862 | 12 | (1 | ) | ||||||||||||||||||||
Accrued interest and accounts receivable |
53,991 | 67,427 | 59,948 | 61,302 | 52,168 | (20 | ) | 3 | ||||||||||||||||||||
Premises and equipment |
11,123 | 11,118 | 10,675 | 10,668 | 10,336 | | 8 | |||||||||||||||||||||
Goodwill |
48,359 | 48,357 | 48,334 | 48,288 | 48,201 | | | |||||||||||||||||||||
Mortgage servicing rights |
15,531 | 15,531 | 13,663 | 14,600 | 10,634 | | 46 | |||||||||||||||||||||
Other intangible assets |
4,383 | 4,621 | 4,862 | 5,082 | 5,349 | (5 | ) | (18 | ) | |||||||||||||||||||
Other assets |
108,992 | 107,091 | 103,957 | 118,536 | 106,366 | 2 | 2 | |||||||||||||||||||||
TOTAL ASSETS |
$ | 2,135,796 | $ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | 5 | 3 | ||||||||||||||||
LIABILITIES (a) |
||||||||||||||||||||||||||||
Deposits |
$ | 925,303 | $ | 938,367 | $ | 867,977 | $ | 866,477 | $ | 906,969 | (1 | ) | 2 | |||||||||||||||
Federal funds purchased and securities loaned or sold
under repurchase agreements |
295,171 | 261,413 | 310,219 | 300,931 | 279,837 | 13 | 5 | |||||||||||||||||||||
Commercial paper |
50,554 | 41,794 | 53,920 | 42,713 | 33,085 | 21 | 53 | |||||||||||||||||||||
Other borrowed funds |
48,981 | 55,740 | 50,824 | 73,968 | 112,257 | (12 | ) | (56 | ) | |||||||||||||||||||
Trading liabilities: |
||||||||||||||||||||||||||||
Debt and equity instruments |
78,228 | 64,946 | 65,233 | 56,021 | 53,786 | 20 | 45 | |||||||||||||||||||||
Derivative payables |
62,741 | 60,125 | 69,214 | 67,197 | 86,020 | 4 | (27 | ) | ||||||||||||||||||||
Accounts payable and other liabilities
(incl. the allowance for lending-related commitments) |
154,185 | 162,696 | 171,386 | 171,685 | 165,521 | (5 | ) | (7 | ) | |||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
93,055 | 15,225 | 17,859 | 20,945 | 9,674 | NM | NM | |||||||||||||||||||||
Long-term debt |
262,857 | 266,318 | 272,124 | 271,939 | 261,845 | (1 | ) | | ||||||||||||||||||||
TOTAL LIABILITIES |
1,971,075 | 1,866,624 | 1,878,756 | 1,871,876 | 1,908,994 | 6 | 3 | |||||||||||||||||||||
STOCKHOLDERS EQUITY (a) |
||||||||||||||||||||||||||||
Preferred stock |
8,152 | 8,152 | 8,152 | 8,152 | 31,993 | | (75 | ) | ||||||||||||||||||||
Common stock |
4,105 | 4,105 | 4,105 | 4,105 | 3,942 | | 4 | |||||||||||||||||||||
Capital surplus |
96,450 | 97,982 | 97,564 | 97,662 | 91,469 | (2 | ) | 5 | ||||||||||||||||||||
Retained earnings |
61,043 | 62,481 | 59,573 | 56,355 | 55,487 | (2 | ) | 10 | ||||||||||||||||||||
Accumulated other comprehensive income (loss) |
761 | (91 | ) | 283 | (3,438 | ) | (4,490 | ) | NM | NM | ||||||||||||||||||
Shares held in RSU trust |
(68 | ) | (68 | ) | (86 | ) | (86 | ) | (86 | ) | | 21 | ||||||||||||||||
Treasury stock, at cost |
(5,722 | ) | (7,196 | ) | (7,338 | ) | (7,984 | ) | (8,121 | ) | 20 | 30 | ||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
164,721 | 165,365 | 162,253 | 154,766 | 170,194 | | (3 | ) | ||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,135,796 | $ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | 5 | 3 | ||||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its credit card securitization trusts, Firm-administered multi-seller conduits and certain mortgage and other consumer loan securitization entities; adding $87.6 billion and $92.1 billion of assets and liabilities, respectively, and decreasing stockholders equity by $4.5 billion, driven predominantly by the establishment of an allowance for loan losses of $7.4 billion (pre-tax) related to the receivables held in the credit card securitization trusts that were consolidated at the adoption date. |
Page 4
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
AVERAGE BALANCES (a) |
||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Deposits with banks |
$ | 64,229 | $ | 49,705 | $ | 62,248 | $ | 68,001 | $ | 88,587 | 29 | % | (27 | )% | ||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
170,036 | $ | 156,848 | 151,705 | 142,226 | 160,986 | 8 | 6 | ||||||||||||||||||||
Securities borrowed |
114,636 | 125,453 | 129,301 | 122,235 | 120,752 | (9 | ) | (5 | ) | |||||||||||||||||||
Trading assets debt instruments |
248,089 | 256,414 | 250,148 | 245,444 | 252,098 | (3 | ) | (2 | ) | |||||||||||||||||||
Securities |
337,441 | 374,327 | 359,451 | 354,216 | 281,420 | (10 | ) | 20 | ||||||||||||||||||||
Loans |
725,136 | 642,406 | 665,386 | 697,908 | 726,959 | 13 | | |||||||||||||||||||||
Other assets (b) |
27,885 | 29,868 | 24,155 | 36,638 | 27,411 | (7 | ) | 2 | ||||||||||||||||||||
Total interest-earning assets |
1,687,452 | 1,635,021 | 1,642,394 | 1,666,668 | 1,658,213 | 3 | 2 | |||||||||||||||||||||
Trading assets equity instruments |
83,674 | 74,936 | 66,790 | 63,507 | 62,748 | 12 | 33 | |||||||||||||||||||||
Trading assets derivative receivables |
78,683 | 86,415 | 99,807 | 114,096 | 142,243 | (9 | ) | (45 | ) | |||||||||||||||||||
Goodwill |
48,542 | 48,341 | 48,328 | 48,273 | 48,071 | | 1 | |||||||||||||||||||||
Other intangible assets |
19,462 | 18,509 | 19,368 | 17,474 | 16,584 | 5 | 17 | |||||||||||||||||||||
All other noninterest-earning assets |
120,867 | 130,003 | 122,489 | 128,354 | 139,260 | (7 | ) | (13 | ) | |||||||||||||||||||
TOTAL ASSETS |
$ | 2,038,680 | $ | 1,993,225 | $ | 1,999,176 | $ | 2,038,372 | $ | 2,067,119 | 2 | (1 | ) | |||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 677,431 | $ | 667,269 | $ | 660,998 | $ | 672,350 | $ | 736,460 | 2 | (8 | ) | |||||||||||||||
Federal funds purchased and securities loaned or
sold under repurchase agreements |
271,934 | 283,263 | 303,175 | 289,971 | 226,110 | (4 | ) | 20 | ||||||||||||||||||||
Commercial paper |
37,461 | 42,290 | 42,728 | 37,371 | 33,694 | (11 | ) | 11 | ||||||||||||||||||||
Other borrowings and liabilities (c) |
188,475 | 182,422 | 178,985 | 207,489 | 236,673 | 3 | (20 | ) | ||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
98,104 | 16,002 | 19,351 | 14,493 | 9,757 | NM | NM | |||||||||||||||||||||
Long-term debt |
262,503 | 268,476 | 271,281 | 274,323 | 258,732 | (2 | ) | 1 | ||||||||||||||||||||
Total interest-bearing liabilities |
1,535,908 | 1,459,722 | 1,476,518 | 1,495,997 | 1,501,426 | 5 | 2 | |||||||||||||||||||||
Trading liabilities derivative payables |
59,053 | 63,423 | 75,458 | 78,155 | 94,944 | (7 | ) | (38 | ) | |||||||||||||||||||
All other noninterest-bearing liabilities |
279,473 | 305,403 | 289,580 | 295,017 | 302,299 | (8 | ) | (8 | ) | |||||||||||||||||||
TOTAL LIABILITIES |
1,874,434 | 1,828,548 | 1,841,556 | 1,869,169 | 1,898,669 | 3 | (1 | ) | ||||||||||||||||||||
Preferred stock |
8,152 | 8,152 | 8,152 | 28,338 | 31,957 | | (74 | ) | ||||||||||||||||||||
Common stockholders equity |
156,094 | 156,525 | 149,468 | 140,865 | 136,493 | | 14 | |||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
164,246 | 164,677 | 157,620 | 169,203 | 168,450 | | (2 | ) | ||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,038,680 | $ | 1,993,225 | $ | 1,999,176 | $ | 2,038,372 | $ | 2,067,119 | 2 | (1 | ) | |||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||
Deposits with banks |
0.60 | % | 0.95 | % | 0.83 | % | 1.45 | % | 2.03 | % | ||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
0.97 | 0.92 | 0.96 | 1.04 | 1.64 | |||||||||||||||||||||||
Securities borrowed |
0.10 | 0.14 | (0.09 | ) | (0.32 | ) | 0.29 | |||||||||||||||||||||
Trading assets debt instruments |
4.56 | 4.63 | 4.78 | 4.91 | 5.27 | |||||||||||||||||||||||
Securities |
3.54 | 3.32 | 3.62 | 3.64 | 4.16 | |||||||||||||||||||||||
Loans |
5.91 | 5.51 | 5.64 | 5.65 | 5.87 | |||||||||||||||||||||||
Other assets (b) |
1.36 | 1.42 | 2.18 | 0.80 | 2.44 | |||||||||||||||||||||||
Total interest-earning assets |
4.07 | 3.80 | 3.95 | 4.00 | 4.41 | |||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||
Interest-bearing deposits |
0.51 | 0.53 | 0.65 | 0.70 | 0.93 | |||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
(0.05 | )(d) | 0.08 | 0.20 | 0.23 | 0.36 | ||||||||||||||||||||||
Commercial paper |
0.19 | 0.20 | 0.23 | 0.24 | 0.47 | |||||||||||||||||||||||
Other borrowings and liabilities (c) |
1.54 | 1.87 | 1.70 | 1.32 | 1.46 | |||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
1.36 | 1.32 | 1.43 | 1.59 | 1.57 | |||||||||||||||||||||||
Long-term debt |
1.95 | 2.01 | 2.09 | 2.60 | 2.73 | |||||||||||||||||||||||
Total interest-bearing liabilities |
0.83 | 0.88 | 0.95 | 1.04 | 1.23 | |||||||||||||||||||||||
INTEREST RATE SPREAD |
3.24 | % | 2.92 | % | 3.00 | % | 2.96 | % | 3.18 | % | ||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS |
3.32 | % | 3.02 | % | 3.10 | % | 3.07 | % | 3.29 | % | ||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS ADJUSTED FOR SECURITIZATIONS (a) |
3.32 | % | 3.33 | % | 3.40 | % | 3.37 | % | 3.60 | % | ||||||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. For additional information on the effect of the adoption, see page 4, footnote (a). | |
(b) | Includes margin loans and the Firms investment in asset-backed commercial paper under the Federal Reserve Bank of Bostons AML facility, which declined to zero during the third quarter of 2009. | |
(c) | Includes securities sold but not yet purchased, brokerage customer payables and advances from Federal Home Loan Banks. | |
(d) | Reflects a benefit from the favorable market environment for dollar-roll financings in first quarter of 2010 and fourth quarter of 2009. |
Page 5
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
CREDIT CARD INCOME |
||||||||||||||||||||||||||||
Credit card income reported |
$ | 1,361 | $ | 1,844 | $ | 1,710 | $ | 1,719 | $ | 1,837 | (26 | )% | (26 | )% | ||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | (375 | ) | (285 | ) | (294 | ) | (540 | ) | NM | NM | |||||||||||||||||
Credit card income managed |
$ | 1,361 | $ | 1,469 | $ | 1,425 | $ | 1,425 | $ | 1,297 | (7 | ) | 5 | |||||||||||||||
OTHER INCOME |
||||||||||||||||||||||||||||
Other income reported |
$ | 412 | $ | 231 | $ | 625 | $ | 10 | $ | 50 | 78 | NM | ||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Tax-equivalent adjustments |
411 | 397 | 371 | 335 | 337 | 4 | 22 | |||||||||||||||||||||
Other income managed |
$ | 823 | $ | 628 | $ | 996 | $ | 345 | $ | 387 | 31 | 113 | ||||||||||||||||
TOTAL NONINTEREST REVENUE |
||||||||||||||||||||||||||||
Total noninterest revenue reported |
$ | 13,961 | $ | 10,786 | $ | 13,885 | $ | 12,953 | $ | 11,658 | 29 | 20 | ||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | (375 | ) | (285 | ) | (294 | ) | (540 | ) | NM | NM | |||||||||||||||||
Tax-equivalent adjustments |
411 | 397 | 371 | 335 | 337 | 4 | 22 | |||||||||||||||||||||
Total noninterest revenue managed |
$ | 14,372 | $ | 10,808 | $ | 13,971 | $ | 12,994 | $ | 11,455 | 33 | 25 | ||||||||||||||||
NET INTEREST INCOME |
||||||||||||||||||||||||||||
Net interest income reported |
$ | 13,710 | $ | 12,378 | $ | 12,737 | $ | 12,670 | $ | 13,367 | 11 | 3 | ||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | 1,992 | 1,983 | 1,958 | 2,004 | NM | NM | |||||||||||||||||||||
Tax-equivalent adjustments |
90 | 58 | 89 | 87 | 96 | 55 | (6 | ) | ||||||||||||||||||||
Net interest income managed |
$ | 13,800 | $ | 14,428 | $ | 14,809 | $ | 14,715 | $ | 15,467 | (4 | ) | (11 | ) | ||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||
Total net revenue reported |
$ | 27,671 | $ | 23,164 | $ | 26,622 | $ | 25,623 | $ | 25,025 | 19 | 11 | ||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Tax-equivalent adjustments |
501 | 455 | 460 | 422 | 433 | 10 | 16 | |||||||||||||||||||||
Total net revenue managed |
$ | 28,172 | $ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | 12 | 5 | ||||||||||||||||
PREPROVISION PROFIT |
||||||||||||||||||||||||||||
Total preprovision profit reported |
$ | 11,547 | $ | 11,160 | $ | 13,167 | $ | 12,103 | $ | 11,652 | 3 | (1 | ) | |||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Tax-equivalent adjustments |
501 | 455 | 460 | 422 | 433 | 10 | 16 | |||||||||||||||||||||
Total preprovision profit managed |
$ | 12,048 | $ | 13,232 | $ | 15,325 | $ | 14,189 | $ | 13,549 | (9 | ) | (11 | ) | ||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||
Provision for credit losses reported |
$ | 7,010 | $ | 7,284 | $ | 8,104 | $ | 8,031 | $ | 8,596 | (4 | ) | (18 | ) | ||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Credit card securitizations |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Provision for credit losses managed |
$ | 7,010 | $ | 8,901 | $ | 9,802 | $ | 9,695 | $ | 10,060 | (21 | ) | (30 | ) | ||||||||||||||
INCOME TAX EXPENSE |
||||||||||||||||||||||||||||
Income tax expense reported |
$ | 1,211 | $ | 598 | $ | 1,551 | $ | 1,351 | $ | 915 | 103 | 32 | ||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||
Tax-equivalent adjustments |
501 | 455 | 460 | 422 | 433 | 10 | 16 | |||||||||||||||||||||
Income tax expense managed |
$ | 1,712 | $ | 1,053 | $ | 2,011 | $ | 1,773 | $ | 1,348 | 63 | 27 | ||||||||||||||||
N/A: Not applicable. |
Page 6
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
TOTAL NET REVENUE (FTE) |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 8,319 | $ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | 69 | % | (1 | )% | ||||||||||||||
Retail Financial Services |
7,776 | 7,669 | 8,218 | 7,970 | 8,835 | 1 | (12 | ) | ||||||||||||||||||||
Card Services |
4,447 | 5,148 | 5,159 | 4,868 | 5,129 | (14 | ) | (13 | ) | |||||||||||||||||||
Commercial Banking |
1,416 | 1,406 | 1,459 | 1,453 | 1,402 | 1 | 1 | |||||||||||||||||||||
Treasury & Securities Services |
1,756 | 1,835 | 1,788 | 1,900 | 1,821 | (4 | ) | (4 | ) | |||||||||||||||||||
Asset Management |
2,131 | 2,195 | 2,085 | 1,982 | 1,703 | (3 | ) | 25 | ||||||||||||||||||||
Corporate/Private Equity (a) |
2,327 | 2,054 | 2,563 | 2,235 | (339 | ) | 13 | NM | ||||||||||||||||||||
TOTAL NET REVENUE |
$ | 28,172 | $ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | 12 | 5 | ||||||||||||||||
TOTAL PREPROVISION PROFIT |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 3,481 | $ | 2,643 | $ | 3,234 | $ | 3,234 | $ | 3,597 | 32 | (3 | ) | |||||||||||||||
Retail Financial Services |
3,534 | 3,367 | 4,022 | 3,891 | 4,664 | 5 | (24 | ) | ||||||||||||||||||||
Card Services |
3,045 | 3,752 | 3,853 | 3,535 | 3,783 | (19 | ) | (20 | ) | |||||||||||||||||||
Commercial Banking |
877 | 863 | 914 | 918 | 849 | 2 | 3 | |||||||||||||||||||||
Treasury & Securities Services |
431 | 444 | 508 | 612 | 502 | (3 | ) | (14 | ) | |||||||||||||||||||
Asset Management |
689 | 725 | 734 | 628 | 405 | (5 | ) | 70 | ||||||||||||||||||||
Corporate/Private Equity (a) |
(9 | ) | 1,438 | 2,060 | 1,371 | (251 | ) | NM | 96 | |||||||||||||||||||
TOTAL PREPROVISION PROFIT |
$ | 12,048 | $ | 13,232 | $ | 15,325 | $ | 14,189 | $ | 13,549 | (9 | ) | (11 | ) | ||||||||||||||
NET INCOME/(LOSS) |
||||||||||||||||||||||||||||
Investment Bank |
$ | 2,471 | $ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | 30 | 54 | ||||||||||||||||
Retail Financial Services |
(131 | ) | (399 | ) | 7 | 15 | 474 | 67 | NM | |||||||||||||||||||
Card Services |
(303 | ) | (306 | ) | (700 | ) | (672 | ) | (547 | ) | 1 | 45 | ||||||||||||||||
Commercial Banking |
390 | 224 | 341 | 368 | 338 | 74 | 15 | |||||||||||||||||||||
Treasury & Securities Services |
279 | 237 | 302 | 379 | 308 | 18 | (9 | ) | ||||||||||||||||||||
Asset Management |
392 | 424 | 430 | 352 | 224 | (8 | ) | 75 | ||||||||||||||||||||
Corporate/Private Equity |
228 | 1,197 | 1,287 | 808 | (262 | ) | (81 | ) | NM | |||||||||||||||||||
TOTAL NET INCOME |
$ | 3,326 | $ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | 1 | 55 | ||||||||||||||||
AVERAGE EQUITY (b) |
||||||||||||||||||||||||||||
Investment Bank |
$ | 40,000 | $ | 33,000 | $ | 33,000 | $ | 33,000 | $ | 33,000 | 21 | 21 | ||||||||||||||||
Retail Financial Services |
28,000 | 25,000 | 25,000 | 25,000 | 25,000 | 12 | 12 | |||||||||||||||||||||
Card Services |
15,000 | 15,000 | 15,000 | 15,000 | 15,000 | | | |||||||||||||||||||||
Commercial Banking |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | |||||||||||||||||||||
Treasury & Securities Services |
6,500 | 5,000 | 5,000 | 5,000 | 5,000 | 30 | 30 | |||||||||||||||||||||
Asset Management |
6,500 | 7,000 | 7,000 | 7,000 | 7,000 | (7 | ) | (7 | ) | |||||||||||||||||||
Corporate/Private Equity |
52,094 | 63,525 | 56,468 | 47,865 | 43,493 | (18 | ) | 20 | ||||||||||||||||||||
TOTAL AVERAGE EQUITY |
$ | 156,094 | $ | 156,525 | $ | 149,468 | $ | 140,865 | $ | 136,493 | | 14 | ||||||||||||||||
RETURN ON EQUITY (b) |
||||||||||||||||||||||||||||
Investment Bank |
25 | % | 23 | % | 23 | % | 18 | % | 20 | % | ||||||||||||||||||
Retail Financial Services |
(2 | ) | (6 | ) | | | 8 | |||||||||||||||||||||
Card Services |
(8 | ) | (8 | ) | (19 | ) | (18 | ) | (15 | ) | ||||||||||||||||||
Commercial Banking |
20 | 11 | 17 | 18 | 17 | |||||||||||||||||||||||
Treasury & Securities Services |
17 | 19 | 24 | 30 | 25 | |||||||||||||||||||||||
Asset Management |
24 | 24 | 24 | 20 | 13 |
(a) | In the second quarter of 2009, Investment Bank (IB) began reporting credit reimbursement from TSS as a component of total net revenue, whereas TSS continued to report its credit reimbursement to IB as a separate line item on its income statement (not part of total net revenue). Corporate/Private Equity includes an adjustment to offset IBs inclusion of the credit reimbursement in total net revenue. Prior periods have been revised for IB and Corporate/Private Equity to reflect this presentation. | |
(b) | Each business segment is allocated capital by taking into consideration stand-alone peer comparisons, economic risk measures and regulatory capital requirements. The amount of capital assigned to each business is referred to as equity. Effective January 1, 2010, the Firm enhanced its line of business equity framework to better align equity assigned to each line of business with the anticipated changes in the business, as well as changes in the competitive and regulatory landscape. |
Page 7
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,446 | $ | 1,892 | $ | 1,658 | $ | 2,239 | $ | 1,380 | (24 | )% | 5 | % | ||||||||||||||
Principal transactions |
3,931 | 84 | 2,714 | 1,841 | 3,515 | NM | 12 | |||||||||||||||||||||
Lending- and deposit-related fees |
202 | 174 | 185 | 167 | 138 | 16 | 46 | |||||||||||||||||||||
Asset management, administration and commissions |
563 | 608 | 633 | 717 | 692 | (7 | ) | (19 | ) | |||||||||||||||||||
All other income (a) |
49 | (14 | ) | 63 | (108 | ) | (56 | ) | NM | NM | ||||||||||||||||||
Noninterest revenue |
6,191 | 2,744 | 5,253 | 4,856 | 5,669 | 126 | 9 | |||||||||||||||||||||
Net interest income |
2,128 | 2,185 | 2,255 | 2,445 | 2,702 | (3 | ) | (21 | ) | |||||||||||||||||||
TOTAL NET REVENUE (b) |
8,319 | 4,929 | 7,508 | 7,301 | 8,371 | 69 | (1 | ) | ||||||||||||||||||||
Provision for credit losses |
(462 | ) | (181 | ) | 379 | 871 | 1,210 | (155 | ) | NM | ||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
2,928 | 549 | 2,778 | 2,677 | 3,330 | 433 | (12 | ) | ||||||||||||||||||||
Noncompensation expense |
1,910 | 1,737 | 1,496 | 1,390 | 1,444 | 10 | 32 | |||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
4,838 | 2,286 | 4,274 | 4,067 | 4,774 | 112 | 1 | |||||||||||||||||||||
Income before income tax expense |
3,943 | 2,824 | 2,855 | 2,363 | 2,387 | 40 | 65 | |||||||||||||||||||||
Income tax expense |
1,472 | 923 | 934 | 892 | 781 | 59 | 88 | |||||||||||||||||||||
NET INCOME |
$ | 2,471 | $ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | 30 | 54 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
ROE |
25 | % | 23 | % | 23 | % | 18 | % | 20 | % | ||||||||||||||||||
ROA |
1.48 | 1.12 | 1.12 | 0.83 | 0.89 | |||||||||||||||||||||||
Overhead ratio |
58 | 46 | 57 | 56 | 57 | |||||||||||||||||||||||
Compensation expense as a percent of total net
revenue |
35 | 11 | 37 | 37 | 40 | |||||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||
Investment banking fees: |
||||||||||||||||||||||||||||
Advisory |
$ | 305 | $ | 611 | $ | 384 | $ | 393 | $ | 479 | (50 | ) | (36 | ) | ||||||||||||||
Equity underwriting |
413 | 549 | 681 | 1,103 | 308 | (25 | ) | 34 | ||||||||||||||||||||
Debt underwriting |
728 | 732 | 593 | 743 | 593 | (1 | ) | 23 | ||||||||||||||||||||
Total investment banking fees |
1,446 | 1,892 | 1,658 | 2,239 | 1,380 | (24 | ) | 5 | ||||||||||||||||||||
Fixed income markets |
5,464 | 2,735 | 5,011 | 4,929 | 4,889 | 100 | 12 | |||||||||||||||||||||
Equity markets |
1,462 | 971 | 941 | 708 | 1,773 | 51 | (18 | ) | ||||||||||||||||||||
Credit portfolio (a) |
(53 | ) | (669 | ) | (102 | ) | (575 | ) | 329 | 92 | NM | |||||||||||||||||
Total net revenue |
$ | 8,319 | $ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | 69 | (1 | ) | |||||||||||||||
REVENUE BY REGION (a) |
||||||||||||||||||||||||||||
Americas |
$ | 4,562 | $ | 2,872 | $ | 3,850 | $ | 4,118 | $ | 4,316 | 59 | 6 | ||||||||||||||||
Europe/Middle East/Africa |
2,814 | 1,502 | 2,912 | 2,303 | 3,073 | 87 | (8 | ) | ||||||||||||||||||||
Asia/Pacific |
943 | 555 | 746 | 880 | 982 | 70 | (4 | ) | ||||||||||||||||||||
Total net revenue |
$ | 8,319 | $ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | 69 | (1 | ) | |||||||||||||||
(a) | Treasury & Securities Services (TSS) was charged a credit reimbursement related to certain exposures managed within the Investment Bank (IB) credit portfolio on behalf of clients shared with TSS. IB recognizes this credit reimbursement in its credit portfolio business in all other income. | |
(b) | Total net revenue included tax-equivalent adjustments, predominantly due to income tax credits related to affordable housing and alternative energy investments, as well as tax-exempt income from municipal bond investments of $403 million, $357 million, $371 million, $334 million, and $365 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, and March 31, 2009, respectively. |
Page 8
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Loans (a): |
||||||||||||||||||||||||||||
Loans retained (b) |
$ | 53,010 | $ | 45,544 | $ | 55,703 | $ | 64,500 | $ | 66,506 | 16 | % | (20 | )% | ||||||||||||||
Loans held-for-sale & loans at fair value |
3,594 | 3,567 | 4,582 | 6,814 | 10,993 | 1 | (67 | ) | ||||||||||||||||||||
Total loans |
56,604 | 49,111 | 60,285 | 71,314 | 77,499 | 15 | (27 | ) | ||||||||||||||||||||
Equity |
40,000 | 33,000 | 33,000 | 33,000 | 33,000 | 21 | 21 | |||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Total assets |
$ | 676,122 | $ | 674,241 | $ | 678,796 | $ | 710,825 | $ | 733,166 | | (8 | ) | |||||||||||||||
Trading assets debt and equity instruments |
284,085 | 285,363 | 270,695 | 265,336 | 272,998 | | 4 | |||||||||||||||||||||
Trading assets derivative receivables |
66,151 | 72,640 | 86,651 | 100,536 | 125,021 | (9 | ) | (47 | ) | |||||||||||||||||||
Loans (a): |
||||||||||||||||||||||||||||
Loans retained (b) |
58,501 | 51,573 | 61,269 | 68,224 | 70,041 | 13 | (16 | ) | ||||||||||||||||||||
Loans held-for-sale & loans at fair value |
3,150 | 4,158 | 4,981 | 8,934 | 12,402 | (24 | ) | (75 | ) | |||||||||||||||||||
Total loans |
61,651 | 55,731 | 66,250 | 77,158 | 82,443 | 11 | (25 | ) | ||||||||||||||||||||
Adjusted assets (c) |
506,635 | 519,403 | 515,718 | 531,632 | 589,163 | (2 | ) | (14 | ) | |||||||||||||||||||
Equity |
40,000 | 33,000 | 33,000 | 33,000 | 33,000 | 21 | 21 | |||||||||||||||||||||
Headcount |
24,977 | 24,654 | 24,828 | 25,783 | 26,142 | 1 | (4 | ) | ||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 697 | $ | 685 | $ | 750 | $ | 433 | $ | 36 | 2 | NM | ||||||||||||||||
Nonperforming assets: |
||||||||||||||||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||
Nonperforming loans retained (b) |
2,459 | 3,196 | 4,782 | 3,407 | 1,738 | (23 | ) | 41 | ||||||||||||||||||||
Nonperforming loans held-for-sale and loans
at fair value |
282 | 308 | 128 | 112 | 57 | (8 | ) | 395 | ||||||||||||||||||||
Total nonperforming loans |
2,741 | 3,504 | 4,910 | 3,519 | 1,795 | (22 | ) | 53 | ||||||||||||||||||||
Derivative receivables |
363 | 529 | 624 | 704 | 1,010 | (31 | ) | (64 | ) | |||||||||||||||||||
Assets acquired in loan satisfactions |
185 | 203 | 248 | 311 | 236 | (9 | ) | (22 | ) | |||||||||||||||||||
Total nonperforming assets |
3,289 | 4,236 | 5,782 | 4,534 | 3,041 | (22 | ) | 8 | ||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||
Allowance for loan losses |
2,601 | 3,756 | 4,703 | 5,101 | 4,682 | (31 | ) | (44 | ) | |||||||||||||||||||
Allowance for lending-related commitments |
482 | 485 | 401 | 351 | 295 | (1 | ) | 63 | ||||||||||||||||||||
Total allowance for credit losses |
3,083 | 4,241 | 5,104 | 5,452 | 4,977 | (27 | ) | (38 | ) | |||||||||||||||||||
Net charge-off rate (b) |
4.83 | % | 5.27 | % | 4.86 | % | 2.55 | % | 0.21 | % | ||||||||||||||||||
Allow. for loan losses to period-end loans retained (b) |
4.91 | 8.25 | 8.44 | 7.91 | 7.04 | |||||||||||||||||||||||
Allow. for loan losses to average loans retained (b) |
4.45 | 7.28 | 7.68 | 7.48 | 6.68 | |||||||||||||||||||||||
Allow. for loan losses to nonperforming loans retained
(d) |
106 | 118 | 98 | 150 | 269 | |||||||||||||||||||||||
Nonperforming loans to total period-end loans |
4.84 | 7.13 | 8.14 | 4.93 | 2.32 | |||||||||||||||||||||||
Nonperforming loans to total average loans |
4.45 | 6.29 | 7.41 | 4.56 | 2.18 |
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-administered multi-seller conduits. As a result, $15.1 billion of loans were recorded on the Consolidated Balance Sheet. | |
(b) | Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans held-for-sale and loans accounted for at fair value. | |
(c) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of variable interest entities (VIEs); (3) cash and securities segregated and on deposit for regulatory and other purposes; (4) goodwill and intangibles; (5) securities received as collateral; and (6) investments purchased under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. The amount of adjusted assets is presented to assist the reader in comparing IBs asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. IB believes an adjusted asset amount that excludes the assets discussed above, which were considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | |
(d) | Nonperforming loans excluded distressed loans held-for-sale that were purchased as part of IBs proprietary activities. |
Page 9
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
MARKET RISK AVERAGE TRADING AND CREDIT PORTFOLIO VAR 95% CONFIDENCE LEVEL |
||||||||||||||||||||||||||||
Trading activities: |
||||||||||||||||||||||||||||
Fixed income |
$ | 69 | $ | 121 | $ | 182 | $ | 179 | $ | 158 | (43 | )% | (56 | )% | ||||||||||||||
Foreign exchange |
13 | 14 | 19 | 16 | 23 | (7 | ) | (43 | ) | |||||||||||||||||||
Equities |
24 | 21 | 19 | 50 | 97 | 14 | (75 | ) | ||||||||||||||||||||
Commodities and other |
15 | 17 | 23 | 22 | 20 | (12 | ) | (25 | ) | |||||||||||||||||||
Diversification (a) |
(49 | ) | (62 | ) | (97 | ) | (97 | ) | (108 | ) | 21 | 55 | ||||||||||||||||
Total trading VaR (b) |
72 | 111 | 146 | 170 | 190 | (35 | ) | (62 | ) | |||||||||||||||||||
Credit portfolio VaR (c) |
19 | 24 | 29 | 68 | 86 | (21 | ) | (78 | ) | |||||||||||||||||||
Diversification (a) |
(9 | ) | (11 | ) | (32 | ) | (60 | ) | (63 | ) | 18 | 86 | ||||||||||||||||
Total trading and credit portfolio VaR |
$ | 82 | $ | 124 | $ | 143 | $ | 178 | $ | 213 | (34 | ) | (62 | ) | ||||||||||||||
YTD March 31, 2010 | Full Year 2009 | |||||||||||||||
Market Share | Rankings | Market Share | Rankings | |||||||||||||
MARKET SHARES AND RANKINGS (d) |
||||||||||||||||
Global Investment Banking Fees (e) |
8 | % | #1 | 9 | % | #1 | ||||||||||
Global debt, equity and equity-related |
7 | % | #1 | 9 | % | #1 | ||||||||||
Global syndicated loans |
9 | % | #1 | 8 | % | #1 | ||||||||||
Global long-term debt (f) |
7 | % | #3 | 8 | % | #1 | ||||||||||
Global equity and equity-related (g) |
9 | % | #1 | 12 | % | #1 | ||||||||||
Global announced M&A (h) |
18 | % | #5 | 25 | % | #3 | ||||||||||
U.S. debt, equity and equity-related |
12 | % | #2 | 15 | % | #1 | ||||||||||
U.S. syndicated loans |
21 | % | #1 | 22 | % | #1 | ||||||||||
U.S. long-term debt (f) |
11 | % | #2 | 14 | % | #1 | ||||||||||
U.S. equity and equity-related (g) |
20 | % | #1 | 16 | % | #2 | ||||||||||
U.S. announced M&A (h) |
29 | % | #3 | 37 | % | #2 |
(a) | Average VaRs were less than the sum of the VaRs of their market risk components, which was due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is usually less than the sum of the risks of the positions themselves. | |
(b) | IB Trading VaR includes predominantly all trading activities in IB, as well as syndicated lending facilities that the Firm intends to distribute; however, particular risk parameters of certain products are not fully captured, such as correlation risk. IB Trading VaR does not include the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. | |
(c) | Credit portfolio VaR includes the derivative credit valuation adjustments (CVA), hedges of the CVA and mark-to-market hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VaR does not include the retained loan portfolio. | |
(d) | Source: Dealogic. Global Investment Banking fees reflects fee rank and share. Remainder of rankings reflect volume rank and share. | |
(e) | Global IB fees exclude money market, short term debt and shelf deals. | |
(f) | Long-term debt tables include investment grade, high yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities and mortgage-backed securities; exclude money market, short term debt, and U.S.municipal securities. | |
(g) | Equity and equity-related rankings include rights offerings and Chinese A-Shares. | |
(h) | Global announced M&A is based upon value at announcement; all other rankings are based upon proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. M&A 1Q10 and 2009 reflects the removal of any withdrawn transactions. U.S. announced M&A represents any U.S. involvement ranking. |
Page 10
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Lending- and deposit-related fees |
$ | 841 | $ | 972 | $ | 1,046 | $ | 1,003 | $ | 948 | (13 | )% | (11 | )% | ||||||||||||||
Asset management, administration and commissions |
452 | 406 | 408 | 425 | 435 | 11 | 4 | |||||||||||||||||||||
Mortgage fees and related income |
655 | 481 | 873 | 807 | 1,633 | 36 | (60 | ) | ||||||||||||||||||||
Credit card income |
450 | 441 | 416 | 411 | 367 | 2 | 23 | |||||||||||||||||||||
Other income |
354 | 299 | 321 | 294 | 214 | 18 | 65 | |||||||||||||||||||||
Noninterest revenue |
2,752 | 2,599 | 3,064 | 2,940 | 3,597 | 6 | (23 | ) | ||||||||||||||||||||
Net interest income |
5,024 | 5,070 | 5,154 | 5,030 | 5,238 | (1 | ) | (4 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
7,776 | 7,669 | 8,218 | 7,970 | 8,835 | 1 | (12 | ) | ||||||||||||||||||||
Provision for credit losses |
3,733 | 4,229 | 3,988 | 3,846 | 3,877 | (12 | ) | (4 | ) | |||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
1,770 | 1,722 | 1,728 | 1,631 | 1,631 | 3 | 9 | |||||||||||||||||||||
Noncompensation expense |
2,402 | 2,499 | 2,385 | 2,365 | 2,457 | (4 | ) | (2 | ) | |||||||||||||||||||
Amortization of intangibles |
70 | 81 | 83 | 83 | 83 | (14 | ) | (16 | ) | |||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
4,242 | 4,302 | 4,196 | 4,079 | 4,171 | (1 | ) | 2 | ||||||||||||||||||||
Income/(loss) before income tax expense (benefit) |
(199 | ) | (862 | ) | 34 | 45 | 787 | 77 | NM | |||||||||||||||||||
Income tax expense/(benefit) |
(68 | ) | (463 | ) | 27 | 30 | 313 | 85 | NM | |||||||||||||||||||
NET INCOME/(LOSS) |
$ | (131 | ) | $ | (399 | ) | $ | 7 | $ | 15 | $ | 474 | 67 | NM | ||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
ROE |
(2 | )% | (6 | )% | | % | | % | 8 | % | ||||||||||||||||||
Overhead ratio |
55 | 56 | 51 | 51 | 47 | |||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
54 | 55 | 50 | 50 | 46 | |||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Assets |
$ | 382,475 | $ | 387,269 | $ | 397,673 | $ | 399,916 | $ | 412,505 | (1 | ) | (7 | ) | ||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans retained |
339,002 | 340,332 | 346,765 | 353,934 | 364,220 | | (7 | ) | ||||||||||||||||||||
Loans held-for-sale and loans at fair value (b) |
11,296 | 14,612 | 14,303 | 13,192 | 12,529 | (23 | ) | (10 | ) | |||||||||||||||||||
Total loans |
350,298 | 354,944 | 361,068 | 367,126 | 376,749 | (1 | ) | (7 | ) | |||||||||||||||||||
Deposits |
362,470 | 357,463 | 361,046 | 371,241 | 380,140 | 1 | (5 | ) | ||||||||||||||||||||
Equity |
28,000 | 25,000 | 25,000 | 25,000 | 25,000 | 12 | 12 | |||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Assets |
$ | 393,867 | $ | 395,045 | $ | 401,620 | $ | 410,228 | $ | 423,472 | | (7 | ) | |||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans retained |
342,997 | 343,411 | 349,762 | 359,372 | 366,925 | | (7 | ) | ||||||||||||||||||||
Loans held-for-sale and loans at fair value (b) |
17,055 | 17,670 | 19,025 | 19,043 | 16,526 | (3 | ) | 3 | ||||||||||||||||||||
Total loans |
360,052 | 361,081 | 368,787 | 378,415 | 383,451 | | (6 | ) | ||||||||||||||||||||
Deposits |
356,934 | 356,464 | 366,944 | 377,259 | 370,278 | | (4 | ) | ||||||||||||||||||||
Equity |
28,000 | 25,000 | 25,000 | 25,000 | 25,000 | 12 | 12 | |||||||||||||||||||||
Headcount |
112,616 | 108,971 | 106,951 | 103,733 | 100,677 | 3 | 12 |
(a) | Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Bankings CDI amortization expense related to prior business combination transactions of $70 million, $80 million, $83 million, $82 million and $83 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. | |
(b) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. These loans totaled $8.4 billion, $12.5 billion, $12.8 billion, $11.3 billion and $8.9 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. Average balances of these loans totaled $14.2 billion, $16.0 billion, $17.7 billion, $16.2 billion and $13.4 billion for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. |
Page 11
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 2,438 | $ | 2,738 | $ | 2,550 | $ | 2,649 | $ | 2,176 | (11 | )% | 12 | % | ||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||
Nonperforming loans retained |
10,769 | 10,611 | 10,091 | 8,792 | 7,714 | 1 | 40 | |||||||||||||||||||||
Nonperforming loans held-for-sale and loans
at fair value |
217 | 234 | 242 | 203 | 264 | (7 | ) | (18 | ) | |||||||||||||||||||
Total nonperforming loans (a) (b) (c) |
10,986 | 10,845 | 10,333 | 8,995 | 7,978 | 1 | 38 | |||||||||||||||||||||
Nonperforming assets (a) (b) (c) |
12,191 | 12,098 | 11,883 | 10,554 | 9,846 | 1 | 24 | |||||||||||||||||||||
Allowance for loan losses |
16,200 | 14,776 | 13,286 | 11,832 | 10,619 | 10 | 53 | |||||||||||||||||||||
Net charge-off rate (e) |
2.88 | % | 3.16 | % | 2.89 | % | 2.96 | % | 2.41 | % | ||||||||||||||||||
Net charge-off rate excluding purchased credit-impaired
loans (d) (e) |
3.76 | 4.16 | 3.81 | 3.89 | 3.16 | |||||||||||||||||||||||
Allowance for loan losses to ending loans retained (e) |
4.78 | 4.34 | 3.83 | 3.34 | 2.92 | |||||||||||||||||||||||
Allowance for loan losses to ending loans retained
excluding purchased credit-impaired loans (d) (e) |
5.16 | 5.09 | 4.63 | 4.41 | 3.84 | |||||||||||||||||||||||
Allowance for loan losses to nonperforming loans
retained (a) (d) (e) |
124 | 124 | 121 | 135 | 138 | |||||||||||||||||||||||
Nonperforming loans to total loans |
3.14 | 3.06 | 2.86 | 2.45 | 2.12 | |||||||||||||||||||||||
Nonperforming loans to total loans excluding purchased
credit-impaired loans (a) |
4.05 | 3.96 | 3.72 | 3.19 | 2.76 |
(a) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. | |
(b) | Certain of these loans are classified as trading assets on the Consolidated Balance Sheets. | |
(c) | Nonperforming loans and assets exclude: (1) mortgage loans insured by U.S. government agencies of $10.5 billion, $9.0 billion, $7.0 billion, $4.2 billion and $4.2 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; (2) real estate owned insured by U.S. government agencies of $707 million, $579 million, $579 million, $508 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $660 million, $542 million, $511 million, $473 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(d) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion, $1.6 billion and $1.1 billion was recorded for these loans at March 31, 2010, December 31, 2009 and September 30, 2009, respectively, which has also been excluded from applicable ratios. No allowance for loan losses was recorded at June 30, 2009 and March 31, 2009. To date, no charge-offs have been recorded for these loans. | |
(e) | Loans held-for-sale and loans accounted for at fair value were excluded when calculating the allowance coverage ratio and net charge-off rate. |
Page 12
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
RETAIL BANKING |
||||||||||||||||||||||||||||
Noninterest revenue |
$ | 1,702 | $ | 1,804 | $ | 1,844 | $ | 1,803 | $ | 1,718 | (6 | )% | (1 | )% | ||||||||||||||
Net interest income |
2,635 | 2,716 | 2,732 | 2,719 | 2,614 | (3 | ) | 1 | ||||||||||||||||||||
Total net revenue |
4,337 | 4,520 | 4,576 | 4,522 | 4,332 | (4 | ) | | ||||||||||||||||||||
Provision for credit losses |
191 | 248 | 208 | 361 | 325 | (23 | ) | (41 | ) | |||||||||||||||||||
Noninterest expense |
2,577 | 2,574 | 2,646 | 2,557 | 2,580 | | | |||||||||||||||||||||
Income before income tax expense |
1,569 | 1,698 | 1,722 | 1,604 | 1,427 | (8 | ) | 10 | ||||||||||||||||||||
Net income |
$ | 898 | $ | 1,027 | $ | 1,043 | $ | 970 | $ | 863 | (13 | ) | 4 | |||||||||||||||
Overhead ratio |
59 | % | 57 | % | 58 | % | 57 | % | 60 | % | ||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
58 | 55 | 56 | 55 | 58 | |||||||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||
Business banking origination volume |
$ | 0.9 | $ | 0.7 | $ | 0.5 | $ | 0.6 | $ | 0.5 | 35 | 96 | ||||||||||||||||
End-of-period loans owned |
16.8 | 17.0 | 17.4 | 17.8 | 18.2 | (1 | ) | (8 | ) | |||||||||||||||||||
End-of-period deposits: |
||||||||||||||||||||||||||||
Checking |
$ | 123.8 | $ | 121.9 | $ | 115.5 | $ | 114.1 | $ | 113.9 | 2 | 9 | ||||||||||||||||
Savings |
163.4 | 153.4 | 151.6 | 150.4 | 152.4 | 7 | 7 | |||||||||||||||||||||
Time and other |
53.2 | 58.0 | 66.6 | 78.9 | 86.5 | (8 | ) | (38 | ) | |||||||||||||||||||
Total end-of-period deposits |
340.4 | 333.3 | 333.7 | 343.4 | 352.8 | 2 | (4 | ) | ||||||||||||||||||||
Average loans owned |
$ | 16.9 | $ | 17.2 | $ | 17.7 | $ | 18.0 | $ | 18.4 | (2 | ) | (8 | ) | ||||||||||||||
Average deposits: |
||||||||||||||||||||||||||||
Checking |
$ | 119.7 | $ | 116.4 | $ | 114.0 | $ | 114.2 | $ | 109.4 | 3 | 9 | ||||||||||||||||
Savings |
158.6 | 153.1 | 151.2 | 151.2 | 148.2 | 4 | 7 | |||||||||||||||||||||
Time and other |
55.6 | 60.3 | 74.4 | 82.7 | 88.2 | (8 | ) | (37 | ) | |||||||||||||||||||
Total average deposits |
333.9 | 329.8 | 339.6 | 348.1 | 345.8 | 1 | (3 | ) | ||||||||||||||||||||
Deposit margin |
3.02 | % | 3.06 | % | 2.99 | % | 2.92 | % | 2.85 | % | ||||||||||||||||||
Average assets |
$ | 28.9 | $ | 28.2 | $ | 28.1 | $ | 29.1 | $ | 30.2 | 2 | (4 | ) | |||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 191 | $ | 248 | $ | 208 | $ | 211 | $ | 175 | (23 | ) | 9 | |||||||||||||||
Net charge-off rate |
4.58 | % | 5.72 | % | 4.66 | % | 4.70 | % | 3.86 | % | ||||||||||||||||||
Nonperforming assets |
$ | 872 | $ | 839 | $ | 816 | $ | 686 | $ | 579 | 4 | 51 | ||||||||||||||||
RETAIL BRANCH BUSINESS METRICS |
||||||||||||||||||||||||||||
Investment sales volume |
$ | 5,956 | $ | 5,851 | $ | 6,243 | $ | 5,292 | $ | 4,398 | 2 | 35 | ||||||||||||||||
Number of: |
||||||||||||||||||||||||||||
Branches |
5,155 | 5,154 | 5,126 | 5,203 | 5,186 | | (1 | ) | ||||||||||||||||||||
ATMs |
15,549 | 15,406 | 15,038 | 14,144 | 14,159 | 1 | 10 | |||||||||||||||||||||
Personal bankers |
19,003 | 17,991 | 16,941 | 15,959 | 15,544 | 6 | 22 | |||||||||||||||||||||
Sales specialists |
6,315 | 5,912 | 5,530 | 5,485 | 5,454 | 7 | 16 | |||||||||||||||||||||
Active online customers (in thousands) |
16,208 | 15,424 | 13,852 | 13,930 | 12,882 | 5 | 26 | |||||||||||||||||||||
Checking accounts (in thousands) |
25,830 | 25,712 | 25,546 | 25,252 | 24,984 | | 3 |
(a) | Retail Banking uses the overhead ratio (excluding the amortization of CDI), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Bankings CDI amortization expense related to prior business combination transactions of $70 million, $80 million, $83 million, $82 million and $83 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. |
Page 13
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
MORTGAGE BANKING & OTHER CONSUMER LENDING |
||||||||||||||||||||||||||||
Noninterest revenue (a) |
$ | 1,018 | $ | 801 | $ | 1,201 | $ | 1,134 | $ | 1,921 | 27 | % | (47 | )% | ||||||||||||||
Net interest income |
893 | 802 | 834 | 721 | 808 | 11 | 11 | |||||||||||||||||||||
Total net revenue |
1,911 | 1,603 | 2,035 | 1,855 | 2,729 | 19 | (30 | ) | ||||||||||||||||||||
Provision for credit losses |
217 | 242 | 222 | 366 | 405 | (10 | ) | (46 | ) | |||||||||||||||||||
Noninterest expense |
1,246 | 1,163 | 1,139 | 1,105 | 1,137 | 7 | 10 | |||||||||||||||||||||
Income before income tax expense |
448 | 198 | 674 | 384 | 1,187 | 126 | (62 | ) | ||||||||||||||||||||
Net income (a) |
$ | 257 | $ | 266 | $ | 412 | $ | 235 | $ | 730 | (3 | ) | (65 | ) | ||||||||||||||
Overhead ratio |
65 | % | 73 | % | 56 | % | 60 | % | 42 | % | ||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||
Auto loans |
$ | 47.4 | $ | 46.0 | $ | 44.3 | $ | 42.9 | $ | 43.1 | 3 | 10 | ||||||||||||||||
Mortgage (b) |
13.7 | 11.9 | 10.1 | 8.9 | 8.8 | 15 | 56 | |||||||||||||||||||||
Student loans and other |
17.4 | 15.8 | 15.6 | 15.7 | 17.4 | 10 | | |||||||||||||||||||||
Total end-of-period loans owned |
78.5 | 73.7 | 70.0 | 67.5 | 69.3 | 7 | 13 | |||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||
Auto loans |
$ | 46.9 | $ | 45.3 | $ | 43.3 | $ | 43.1 | $ | 42.5 | 4 | 10 | ||||||||||||||||
Mortgage (b) |
12.5 | 10.6 | 8.9 | 8.4 | 7.4 | 18 | 69 | |||||||||||||||||||||
Student loans and other |
18.4 | 15.6 | 15.3 | 16.8 | 17.6 | 18 | 5 | |||||||||||||||||||||
Total average loans owned (c) |
77.8 | 71.5 | 67.5 | 68.3 | 67.5 | 9 | 15 | |||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs: |
||||||||||||||||||||||||||||
Auto loans |
$ | 102 | $ | 148 | $ | 159 | $ | 146 | $ | 174 | (31 | ) | (41 | ) | ||||||||||||||
Mortgage |
6 | | 7 | 2 | 5 | NM | 20 | |||||||||||||||||||||
Student loans and other |
64 | 92 | 60 | 101 | 34 | (30 | ) | 88 | ||||||||||||||||||||
Total net charge-offs |
$ | 172 | $ | 240 | $ | 226 | $ | 249 | $ | 213 | (28 | ) | (19 | ) | ||||||||||||||
Net charge-off rate: |
||||||||||||||||||||||||||||
Auto loans |
0.88 | % | 1.30 | % | 1.46 | % | 1.36 | % | 1.66 | % | ||||||||||||||||||
Mortgage |
0.20 | | 0.32 | 0.10 | 0.29 | |||||||||||||||||||||||
Student loans and other |
1.64 | 2.59 | 1.66 | 2.79 | 0.92 | |||||||||||||||||||||||
Total net charge-off rate (c) |
0.93 | 1.36 | 1.35 | 1.52 | 1.34 | |||||||||||||||||||||||
30+ day delinquency rate (d) (e) |
1.47 | % | 1.75 | % | 1.76 | % | 1.80 | % | 1.56 | % | ||||||||||||||||||
Nonperforming assets (f) |
$ | 1,006 | $ | 912 | $ | 872 | $ | 783 | $ | 830 | 10 | 21 |
(a) | Losses related to the repurchase of previously-sold loans are recorded as a reduction of production revenue. These losses totaled $432 million, $672 million, $465 million, $255 million and $220 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. The losses resulted in a negative impact on net income of $252 million, $413 million, $286 million, $157 million and $135 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. | |
(b) | Predominantly represents loans repurchased from Government National Mortgage Association (GNMA) pools, which are insured by U.S. government agencies. | |
(c) | Total average loans owned includes loans held-for-sale of $2.9 billion, $1.7 billion, $1.3 billion, $2.8 billion and $3.1 billion for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded when calculating the net charge-off rate. | |
(d) | Excludes mortgage loans that are insured by U.S. government agencies of $11.2 billion, $9.7 billion, $7.7 billion, $5.1 billion and $4.9 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(e) | Excludes loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $1.0 billion, $942 million, $903 million, $854 million and $770 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(f) | Nonperforming loans and assets excludes: (1) mortgage loans insured by U.S. government agencies of $10.5 billion, $9.0 billion, $7.0 billion, $4.2 billion and $4.2 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; (2) real estate owned insured by U.S. government agencies of $707 million, $579 million, $579 million, $508 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $660 million, $542 million, $511 million, $473 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. |
Page 14
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
MORTGAGE BANKING & OTHER CONSUMER LENDING (continued) |
||||||||||||||||||||||||||||
Origination volume: |
||||||||||||||||||||||||||||
Mortgage origination volume by channel |
||||||||||||||||||||||||||||
Retail |
$ | 11.4 | $ | 12.3 | $ | 13.3 | $ | 14.7 | $ | 13.6 | (7 | )% | (16 | )% | ||||||||||||||
Wholesale (a) |
0.4 | 0.6 | 0.7 | 0.7 | 1.6 | (33 | ) | (75 | ) | |||||||||||||||||||
Correspondent (a) |
16.0 | 20.0 | 21.1 | 21.9 | 18.0 | (20 | ) | (11 | ) | |||||||||||||||||||
CNT (negotiated transactions) |
3.9 | 1.9 | 2.0 | 3.8 | 4.5 | 105 | (13 | ) | ||||||||||||||||||||
Total mortgage origination volume |
31.7 | 34.8 | 37.1 | 41.1 | 37.7 | (9 | ) | (16 | ) | |||||||||||||||||||
Student loans |
1.6 | 0.6 | 1.5 | 0.4 | 1.7 | 167 | (6 | ) | ||||||||||||||||||||
Auto |
6.3 | 5.9 | 6.9 | 5.3 | 5.6 | 7 | 13 | |||||||||||||||||||||
Application volume: |
||||||||||||||||||||||||||||
Mortgage application volume by channel |
||||||||||||||||||||||||||||
Retail |
$ | 20.3 | $ | 17.4 | $ | 17.8 | $ | 23.0 | $ | 32.7 | 17 | (38 | ) | |||||||||||||||
Wholesale (a) |
0.8 | 0.7 | 1.1 | 1.3 | 1.8 | 14 | (56 | ) | ||||||||||||||||||||
Correspondent (a) |
18.2 | 25.3 | 26.6 | 29.7 | 29.2 | (28 | ) | (38 | ) | |||||||||||||||||||
Total mortgage application volume |
39.3 | 43.4 | 45.5 | 54.0 | 63.7 | (9 | ) | (38 | ) | |||||||||||||||||||
Average mortgage loans held-for-sale and loans
at fair value (b) |
14.5 | 16.2 | 18.0 | 16.7 | 14.0 | (10 | ) | 4 | ||||||||||||||||||||
Average assets |
124.8 | 119.5 | 115.2 | 111.6 | 113.4 | 4 | 10 | |||||||||||||||||||||
Third-party mortgage loans serviced (ending) |
1,075.0 | 1,082.1 | 1,098.9 | 1,117.5 | 1,148.8 | (1 | ) | (6 | ) | |||||||||||||||||||
Third-party mortgage loans serviced (average) |
1,076.4 | 1,088.8 | 1,104.4 | 1,128.1 | 1,155.0 | (1 | ) | (7 | ) | |||||||||||||||||||
MSR net carrying value (ending) |
15.5 | 15.5 | 13.6 | 14.6 | 10.6 | | 46 | |||||||||||||||||||||
Ratio of MSR net carrying value (ending) to third-party
mortgage loans serviced (ending) |
1.44 | % | 1.43 | % | 1.24 | % | 1.31 | % | 0.92 | % | ||||||||||||||||||
SUPPLEMENTAL MORTGAGE FEES AND RELATED INCOME DETAILS (in millions) |
||||||||||||||||||||||||||||
Production revenue |
$ | 1 | $ | (192 | ) | $ | (70 | ) | $ | 284 | $ | 481 | NM | (100 | ) | |||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||||||
Loan servicing revenue |
1,107 | 1,221 | 1,220 | 1,279 | 1,222 | (9 | ) | (9 | ) | |||||||||||||||||||
Other changes in MSR asset fair value |
(605 | ) | (657 | ) | (712 | ) | (837 | ) | (1,073 | ) | 8 | 44 | ||||||||||||||||
Total operating revenue |
502 | 564 | 508 | 442 | 149 | (11 | ) | 237 | ||||||||||||||||||||
Risk management: |
||||||||||||||||||||||||||||
Changes in MSR asset fair value due to inputs or
assumptions in model |
(96 | ) | 1,762 | (1,099 | ) | 3,831 | 1,310 | NM | NM | |||||||||||||||||||
Derivative valuation adjustments and other |
248 | (1,653 | ) | 1,534 | (3,750 | ) | (307 | ) | NM | NM | ||||||||||||||||||
Total risk management |
152 | 109 | 435 | 81 | 1,003 | 39 | (85 | ) | ||||||||||||||||||||
Total net mortgage servicing revenue |
654 | 673 | 943 | 523 | 1,152 | (3 | ) | (43 | ) | |||||||||||||||||||
Mortgage fees and related income |
655 | 481 | 873 | 807 | 1,633 | 36 | (60 | ) | ||||||||||||||||||||
Ratio of annualized loan servicing revenue to third-party
mortgage loans serviced (average) |
0.42 | % | 0.44 | % | 0.44 | % | 0.45 | % | 0.43 | % | ||||||||||||||||||
MSR revenue multiple (c) |
3.43x | 3.25x | 2.82x | 2.91x | 2.14x |
(a) | Includes rural housing loans sourced through brokers and correspondents, which are underwritten under U.S. Department of Agriculture guidelines. Prior period amounts have been revised to conform with the current period presentation. | |
(b) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. Average balances of these loans totaled $14.2 billion, $16.0 billion, $17.7 billion, $16.2 billion and $13.4 billion for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. | |
(c) | Represents the ratio of MSR net carrying value (ending) to third-party mortgage loans serviced (ending) divided by the ratio of annualized loan servicing revenue to third-party mortgage loans serviced (average). |
Page 15
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
REAL ESTATE PORTFOLIOS |
||||||||||||||||||||||||||||
Noninterest revenue |
$ | 32 | $ | (6 | ) | $ | 19 | $ | 3 | $ | (42 | ) | NM | % | NM | % | ||||||||||||
Net interest income |
1,496 | 1,552 | 1,588 | 1,590 | 1,816 | (4 | ) | (18 | ) | |||||||||||||||||||
Total net revenue |
1,528 | 1,546 | 1,607 | 1,593 | 1,774 | (1 | ) | (14 | ) | |||||||||||||||||||
Provision for credit losses |
3,325 | 3,739 | 3,558 | 3,119 | 3,147 | (11 | ) | 6 | ||||||||||||||||||||
Noninterest expense |
419 | 565 | 411 | 417 | 454 | (26 | ) | (8 | ) | |||||||||||||||||||
Income/(loss) before income tax
expense/(benefit) |
(2,216 | ) | (2,758 | ) | (2,362 | ) | (1,943 | ) | (1,827 | ) | 20 | (21 | ) | |||||||||||||||
Net income/(loss) |
$ | (1,286 | ) | $ | (1,692 | ) | $ | (1,448 | ) | $ | (1,190 | ) | $ | (1,119 | ) | 24 | (15 | ) | ||||||||||
Overhead ratio |
27 | % | 37 | % | 26 | % | 26 | % | 26 | % | ||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||
LOANS EXCLUDING PURCHASED CREDIT-IMPAIRED LOANS (a) |
||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 97.7 | $ | 101.4 | $ | 104.8 | $ | 108.2 | $ | 111.7 | (4 | ) | (13 | ) | ||||||||||||||
Prime mortgage |
46.8 | 47.5 | 50.0 | 53.2 | 56.6 | (1 | ) | (17 | ) | |||||||||||||||||||
Subprime mortgage |
13.2 | 12.5 | 13.3 | 13.8 | 14.6 | 6 | (10 | ) | ||||||||||||||||||||
Option ARMs |
8.6 | 8.5 | 8.9 | 9.0 | 9.0 | 1 | (4 | ) | ||||||||||||||||||||
Other |
1.0 | 0.7 | 0.7 | 0.9 | 0.9 | 43 | 11 | |||||||||||||||||||||
Total end-of-period loans owned |
167.3 | 170.6 | 177.7 | 185.1 | 192.8 | (2 | ) | (13 | ) | |||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 99.5 | $ | 103.3 | $ | 106.6 | $ | 110.1 | $ | 113.4 | (4 | ) | (12 | ) | ||||||||||||||
Prime mortgage |
47.9 | 48.8 | 51.7 | 54.9 | 58.0 | (2 | ) | (17 | ) | |||||||||||||||||||
Subprime mortgage |
13.8 | 12.8 | 13.6 | 14.3 | 14.9 | 8 | (7 | ) | ||||||||||||||||||||
Option ARMs |
8.7 | 8.7 | 8.9 | 9.1 | 8.8 | | (1 | ) | ||||||||||||||||||||
Other |
1.1 | 0.7 | 0.8 | 0.9 | 0.9 | 57 | 22 | |||||||||||||||||||||
Total average loans owned |
171.0 | 174.3 | 181.6 | 189.3 | 196.0 | (2 | ) | (13 | ) | |||||||||||||||||||
PURCHASED CREDIT-IMPAIRED LOANS (a) |
||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 26.0 | $ | 26.5 | $ | 27.1 | $ | 27.7 | $ | 28.4 | (2 | ) | (8 | ) | ||||||||||||||
Prime mortgage |
19.2 | 19.7 | 20.2 | 20.8 | 21.4 | (3 | ) | (10 | ) | |||||||||||||||||||
Subprime mortgage |
5.8 | 6.0 | 6.1 | 6.4 | 6.6 | (3 | ) | (12 | ) | |||||||||||||||||||
Option ARMs |
28.3 | 29.0 | 29.8 | 30.5 | 31.2 | (2 | ) | (9 | ) | |||||||||||||||||||
Total end-of-period loans owned |
79.3 | 81.2 | 83.2 | 85.4 | 87.6 | (2 | ) | (9 | ) | |||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 26.2 | $ | 26.7 | $ | 27.4 | $ | 28.0 | $ | 28.4 | (2 | ) | (8 | ) | ||||||||||||||
Prime mortgage |
19.5 | 20.0 | 20.5 | 21.0 | 21.6 | (3 | ) | (10 | ) | |||||||||||||||||||
Subprime mortgage |
5.9 | 6.1 | 6.2 | 6.5 | 6.7 | (3 | ) | (12 | ) | |||||||||||||||||||
Option ARMs |
28.6 | 29.3 | 30.2 | 31.0 | 31.4 | (2 | ) | (9 | ) | |||||||||||||||||||
Total average loans owned |
80.2 | 82.1 | 84.3 | 86.5 | 88.1 | (2 | ) | (9 | ) | |||||||||||||||||||
TOTAL REAL ESTATE PORTFOLIOS |
||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 123.7 | $ | 127.9 | $ | 131.9 | $ | 135.9 | $ | 140.1 | (3 | ) | (12 | ) | ||||||||||||||
Prime mortgage |
66.0 | 67.2 | 70.2 | 74.0 | 78.0 | (2 | ) | (15 | ) | |||||||||||||||||||
Subprime mortgage |
19.0 | 18.5 | 19.4 | 20.2 | 21.2 | 3 | (10 | ) | ||||||||||||||||||||
Option ARMs |
36.9 | 37.5 | 38.7 | 39.5 | 40.2 | (2 | ) | (8 | ) | |||||||||||||||||||
Other |
1.0 | 0.7 | 0.7 | 0.9 | 0.9 | 43 | 11 | |||||||||||||||||||||
Total end-of-period loans owned |
246.6 | 251.8 | 260.9 | 270.5 | 280.4 | (2 | ) | (12 | ) | |||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||
Home equity |
$ | 125.7 | $ | 130.0 | $ | 134.0 | $ | 138.1 | $ | 141.8 | (3 | ) | (11 | ) | ||||||||||||||
Prime mortgage |
67.4 | 68.8 | 72.2 | 75.9 | 79.6 | (2 | ) | (15 | ) | |||||||||||||||||||
Subprime mortgage |
19.7 | 18.9 | 19.8 | 20.8 | 21.6 | 4 | (9 | ) | ||||||||||||||||||||
Option ARMs |
37.3 | 38.0 | 39.1 | 40.1 | 40.2 | (2 | ) | (7 | ) | |||||||||||||||||||
Other |
1.1 | 0.7 | 0.8 | 0.9 | 0.9 | 57 | 22 | |||||||||||||||||||||
Total average loans owned |
251.2 | 256.4 | 265.9 | 275.8 | 284.1 | (2 | ) | (12 | ) | |||||||||||||||||||
Average assets |
240.2 | 247.3 | 258.3 | 269.5 | 279.9 | (3 | ) | (14 | ) | |||||||||||||||||||
Home equity origination volume |
0.3 | 0.4 | 0.5 | 0.6 | 0.9 | (25 | ) | (67 | ) |
(a) | Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chases acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the underlying loans are contractually past due. |
Page 16
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
REAL ESTATE PORTFOLIOS (continued)
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net
charge-offs excluding purchased credit-impaired loans(a) |
||||||||||||||||||||||||||||
Home equity |
$ | 1,126 | $ | 1,177 | $ | 1,142 | $ | 1,265 | $ | 1,098 | (4 | )% | 3 | % | ||||||||||||||
Prime mortgage |
453 | 568 | 518 | 479 | 307 | (20 | ) | 48 | ||||||||||||||||||||
Subprime mortgage |
457 | 452 | 422 | 410 | 364 | 1 | 26 | |||||||||||||||||||||
Option ARMs |
23 | 29 | 15 | 15 | 4 | (21 | ) | 475 | ||||||||||||||||||||
Other |
16 | 24 | 19 | 20 | 15 | (33 | ) | 7 | ||||||||||||||||||||
Total net charge-offs |
2,075 | 2,250 | 2,116 | 2,189 | 1,788 | (8 | ) | 16 | ||||||||||||||||||||
Net charge-off rate excluding purchased
credit-impaired loans(a) |
||||||||||||||||||||||||||||
Home equity |
4.59 | % | 4.52 | % | 4.25 | % | 4.61 | % | 3.93 | % | ||||||||||||||||||
Prime mortgage |
3.84 | 4.62 | 3.98 | 3.50 | 2.15 | |||||||||||||||||||||||
Subprime mortgage |
13.43 | 14.01 | 12.31 | 11.50 | 9.91 | |||||||||||||||||||||||
Option ARMs |
1.07 | 1.32 | 0.67 | 0.66 | 0.18 | |||||||||||||||||||||||
Other |
5.90 | 13.60 | 9.42 | 8.91 | 6.76 | |||||||||||||||||||||||
Total net charge-off rate excluding purchased
credit-impaired loans |
4.92 | 5.12 | 4.62 | 4.64 | 3.70 | |||||||||||||||||||||||
Net charge-off rate reported |
||||||||||||||||||||||||||||
Home equity |
3.63 | 3.59 | 3.38 | 3.67 | 3.14 | |||||||||||||||||||||||
Prime mortgage |
2.73 | 3.28 | 2.85 | 2.53 | 1.56 | |||||||||||||||||||||||
Subprime mortgage |
9.41 | 9.49 | 8.46 | 7.91 | 6.83 | |||||||||||||||||||||||
Option ARMs |
0.25 | 0.30 | 0.15 | 0.15 | 0.04 | |||||||||||||||||||||||
Other |
5.90 | 13.60 | 9.42 | 8.91 | 6.76 | |||||||||||||||||||||||
Total net charge-off rate reported |
3.35 | 3.48 | 3.16 | 3.18 | 2.55 | |||||||||||||||||||||||
30+ day delinquency rate excluding purchased
credit-impaired loans (b) |
7.28 | 7.73 | 7.46 | 6.46 | 5.87 | |||||||||||||||||||||||
Allowance for loan losses |
$ | 14,127 | $ | 12,752 | $ | 11,261 | $ | 9,821 | $ | 8,870 | 11 | 59 | ||||||||||||||||
Nonperforming assets (c) |
10,313 | 10,347 | 10,196 | 9,085 | 8,437 | | 22 | |||||||||||||||||||||
Allowance for loan losses to ending loans retained |
5.73 | % | 5.06 | % | 4.32 | % | 3.63 | % | 3.16 | % | ||||||||||||||||||
Allowance for loan losses to ending loans retained
excluding purchased credit-impaired loans (a) |
6.76 | 6.55 | 5.72 | 5.31 | 4.60 |
(a) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion, $1.6 billion and $1.1 billion was recorded for these loans at March 31, 2010, December 31, 2009 and September 30, 2009, respectively, which has also been excluded from applicable ratios. No allowance for losses was recorded at June 30, 2009 and March 31, 2009. To date, no charge-offs have been recorded for these loans. | |
(b) | The delinquency rate for purchased credit-impaired loans was 28.49%, 27.79%, 25.56%, 23.37% and 21.36% at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. | |
(c) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. |
Page 17
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME
STATEMENT (a) |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Credit card income |
$ | 813 | $ | 931 | $ | 916 | $ | 921 | $ | 844 | (13 | )% | (4 | )% | ||||||||||||||
All other income |
(55 | ) | (46 | ) | (85 | ) | (364 | ) | (197 | ) | (20 | ) | 72 | |||||||||||||||
Noninterest revenue |
758 | 885 | 831 | 557 | 647 | (14 | ) | 17 | ||||||||||||||||||||
Net interest income |
3,689 | 4,263 | 4,328 | 4,311 | 4,482 | (13 | ) | (18 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
4,447 | 5,148 | 5,159 | 4,868 | 5,129 | (14 | ) | (13 | ) | |||||||||||||||||||
Provision for credit losses |
3,512 | 4,239 | 4,967 | 4,603 | 4,653 | (17 | ) | (25 | ) | |||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
330 | 336 | 354 | 329 | 357 | (2 | ) | (8 | ) | |||||||||||||||||||
Noncompensation expense |
949 | 938 | 829 | 873 | 850 | 1 | 12 | |||||||||||||||||||||
Amortization of intangibles |
123 | 122 | 123 | 131 | 139 | 1 | (12 | ) | ||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,402 | 1,396 | 1,306 | 1,333 | 1,346 | | 4 | |||||||||||||||||||||
Income/(loss) before income tax expense/(benefit) |
(467 | ) | (487 | ) | (1,114 | ) | (1,068 | ) | (870 | ) | 4 | 46 | ||||||||||||||||
Income tax expense/(benefit) |
(164 | ) | (181 | ) | (414 | ) | (396 | ) | (323 | ) | 9 | 49 | ||||||||||||||||
NET INCOME/(LOSS) |
$ | (303 | ) | $ | (306 | ) | $ | (700 | ) | $ | (672 | ) | $ | (547 | ) | 1 | 45 | |||||||||||
Memo: Net securitization income/(loss) |
N/A | $ | 17 | $ | (43 | ) | $ | (268 | ) | $ | (180 | ) | NM | NM | ||||||||||||||
FINANCIAL RATIOS (a) |
||||||||||||||||||||||||||||
ROE |
(8 | )% | (8 | )% | (19 | )% | (18 | )% | (15 | )% | ||||||||||||||||||
Overhead ratio |
32 | 27 | 25 | 27 | 26 | |||||||||||||||||||||||
Percentage of average outstandings: |
||||||||||||||||||||||||||||
Net interest income |
9.60 | 10.36 | 10.15 | 9.93 | 9.91 | |||||||||||||||||||||||
Provision for credit losses |
9.14 | 10.30 | 11.65 | 10.60 | 10.29 | |||||||||||||||||||||||
Noninterest revenue |
1.97 | 2.15 | 1.95 | 1.28 | 1.43 | |||||||||||||||||||||||
Risk adjusted margin (b) |
2.43 | 2.21 | 0.45 | 0.61 | 1.05 | |||||||||||||||||||||||
Noninterest expense |
3.65 | 3.39 | 3.06 | 3.07 | 2.98 | |||||||||||||||||||||||
Pretax income/(loss) (ROO) (c) |
(1.22 | ) | (1.18 | ) | (2.61 | ) | (2.46 | ) | (1.92 | ) | ||||||||||||||||||
Net income/(loss) |
(0.79 | ) | (0.74 | ) | (1.64 | ) | (1.55 | ) | (1.21 | ) | ||||||||||||||||||
BUSINESS
METRICS |
||||||||||||||||||||||||||||
Sales volume (in billions) |
$ | 69.4 | $ | 78.8 | $ | 74.7 | $ | 74.0 | $ | 66.6 | (12 | ) | 4 | |||||||||||||||
New accounts opened (in millions) |
2.5 | 3.2 | 2.4 | 2.4 | 2.2 | (22 | ) | 14 | ||||||||||||||||||||
Open accounts (in millions) |
88.9 | 93.3 | 93.6 | 100.3 | 105.7 | (5 | ) | (16 | ) | |||||||||||||||||||
Merchant acquiring business |
||||||||||||||||||||||||||||
Bank card volume (in billions) |
$ | 108.0 | $ | 110.4 | $ | 103.5 | $ | 101.4 | $ | 94.4 | (2 | ) | 14 | |||||||||||||||
Total transactions (in billions) |
4.7 | 4.9 | 4.5 | 4.5 | 4.1 | (4 | ) | 15 |
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts. As a result, $84.7 billion of loans and $7.4 billion of allowance for loan losses were recorded on the Consolidated Balance Sheet, while $16.7 billion of retained securitization interests reported at December 31, 2009 were eliminated upon consolidation. Financial information presented for periods ended after January 1, 2010 are comparable with those previously presented on a managed basis. For further discussion, see page 38 of this Financial Supplement. | |
(b) | Represents total net revenue less provision for credit losses. | |
(c) | Pretax return on average managed outstandings. | |
N/A: Not applicable |
Page 18
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 149,260 | $ | 78,786 | $ | 78,215 | $ | 85,736 | $ | 90,911 | 89 | % | 64 | % | ||||||||||||||
Securitized and unconsolidated loans (a) |
N/A | 84,626 | 87,028 | 85,790 | 85,220 | NM | NM | |||||||||||||||||||||
Total loans |
$ | 149,260 | $ | 163,412 | $ | 165,243 | $ | 171,526 | $ | 176,131 | (9 | ) | (15 | ) | ||||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | | | ||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Managed assets |
$ | 156,968 | $ | 184,535 | $ | 192,141 | $ | 193,310 | $ | 201,200 | (15 | ) | (22 | ) | ||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 155,790 | $ | 77,759 | $ | 83,146 | $ | 89,692 | $ | 97,783 | 100 | 59 | ||||||||||||||||
Securitized and unconsolidated loans (a) |
N/A | 85,452 | 86,017 | 84,417 | 85,619 | NM | NM | |||||||||||||||||||||
Total average loans |
$ | 155,790 | $ | 163,211 | $ | 169,163 | $ | 174,109 | $ | 183,402 | (5 | ) | (15 | ) | ||||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | | | ||||||||||||||||
Headcount |
22,478 | 22,676 | 22,850 | 22,897 | 23,759 | (1 | ) | (5 | ) | |||||||||||||||||||
CREDIT
QUALITY STATISTICS (a) |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 4,512 | $ | 3,839 | $ | 4,392 | $ | 4,353 | $ | 3,493 | 18 | 29 | ||||||||||||||||
Net charge-off rate (b) |
11.75 | % | 9.33 | % | 10.30 | % | 10.03 | % | 7.72 | % | ||||||||||||||||||
Delinquency rates |
||||||||||||||||||||||||||||
30+ day (b) |
5.62 | % | 6.28 | % | 5.99 | % | 5.86 | % | 6.16 | % | ||||||||||||||||||
90+ day (b) |
3.15 | 3.59 | 2.76 | 3.25 | 3.22 | |||||||||||||||||||||||
Allowance for loan losses (c) |
$ | 16,032 | $ | 9,672 | $ | 9,297 | $ | 8,839 | $ | 8,849 | 66 | 81 | ||||||||||||||||
Allowance for loan losses to period-end loans (c) (d) |
10.74 | % | 12.28 | % | 11.89 | % | 10.31 | % | 9.73 | % | ||||||||||||||||||
KEY
STATS WASHINGTON MUTUAL ONLY |
||||||||||||||||||||||||||||
Loans |
$ | 17,204 | $ | 19,653 | $ | 21,163 | $ | 23,093 | $ | 25,908 | (12 | ) | (34 | ) | ||||||||||||||
Average loans |
18,607 | 20,377 | 22,287 | 24,418 | 27,578 | (9 | ) | (33 | ) | |||||||||||||||||||
Net interest income (e) |
15.06 | % | 17.12 | % | 17.04 | % | 17.90 | % | 16.45 | % | ||||||||||||||||||
Risk adjusted margin (e) (f) |
2.47 | (0.66 | ) | (4.45 | ) | (3.89 | ) | 4.42 | ||||||||||||||||||||
Net charge-off rate (g) |
24.14 | 20.49 | 21.94 | 19.17 | 14.57 | |||||||||||||||||||||||
30+ day delinquency rate (g) |
10.49 | 12.72 | 12.44 | 11.98 | 10.89 | |||||||||||||||||||||||
90+ day delinquency rate (g) |
6.32 | 7.76 | 6.21 | 6.85 | 5.79 | |||||||||||||||||||||||
KEY
STATS EXCLUDING WASHINGTON MUTUAL |
||||||||||||||||||||||||||||
Loans |
$ | 132,056 | $ | 143,759 | $ | 144,080 | $ | 148,433 | $ | 150,223 | (8 | ) | (12 | ) | ||||||||||||||
Average loans |
137,183 | 142,834 | 146,876 | 149,691 | 155,824 | (4 | ) | (12 | ) | |||||||||||||||||||
Net interest income (e) |
8.86 | % | 9.40 | % | 9.10 | % | 8.63 | % | 8.75 | % | ||||||||||||||||||
Risk adjusted margin (e) (f) |
2.43 | 2.62 | 1.19 | 1.34 | 0.46 | |||||||||||||||||||||||
Net charge-off rate |
10.54 | 8.64 | 9.41 | 8.97 | 6.86 | |||||||||||||||||||||||
30+ day delinquency rate |
4.99 | 5.52 | 5.38 | 5.27 | 5.34 | |||||||||||||||||||||||
90+ day delinquency rate |
2.74 | 3.13 | 2.48 | 2.90 | 2.78 |
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts. As a result, $84.7 billion of loans and $7.4 billion of allowance for loan losses were recorded on the Consolidated Balance Sheet, while $16.7 billion of retained securitization interests reported at December 31, 2009 were eliminated upon consolidation. Financial information presented for periods ended after January 1, 2010 are comparable with those previously presented on a managed basis. For further discussion, see page 38 of this Financial Supplement. | |
(b) | Results reflect the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. Delinquency rates for March 31, 2010 are not impacted. | |
(c) | Based on loans on balance sheets. | |
(d) | Includes $1.0 billion, $3.0 billion and $5.0 billion of loans at December 31, 2009, September 30, 2009 and June 30, 2009, respectively, held by the Washington Mutual Master Trust, which were consolidated onto the Card Services balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009 and June 30, 2009. Excluding these loans, the allowance for loan losses to period-end loans would have been 12.43%, 12.36% and 10.95%, respectively. | |
(e) | As a percentage of average managed outstandings. | |
(f) | Represents total net revenue less provision for credit losses. | |
(g) | Excludes the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. Delinquency rates for March 31, 2010 are not impacted. | |
N/A: Not applicable. |
Page 19
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME
STATEMENT DATA |
||||||||||||||||||||||||||||
Credit card income |
||||||||||||||||||||||||||||
Reported |
$ | 813 | $ | 1,306 | $ | 1,201 | $ | 1,215 | $ | 1,384 | (38 | )% | (41 | )% | ||||||||||||||
Securitization adjustments (a) |
N/A | (375 | ) | (285 | ) | (294 | ) | (540 | ) | NM | NM | |||||||||||||||||
Managed credit card income |
$ | 813 | $ | 931 | $ | 916 | $ | 921 | $ | 844 | (13 | ) | (4 | ) | ||||||||||||||
Net interest income |
||||||||||||||||||||||||||||
Reported |
$ | 3,689 | $ | 2,271 | $ | 2,345 | $ | 2,353 | $ | 2,478 | 62 | 49 | ||||||||||||||||
Securitization adjustments (a) |
N/A | 1,992 | 1,983 | 1,958 | 2,004 | NM | NM | |||||||||||||||||||||
Managed net interest income |
$ | 3,689 | $ | 4,263 | $ | 4,328 | $ | 4,311 | $ | 4,482 | (13 | ) | (18 | ) | ||||||||||||||
Total net revenue |
||||||||||||||||||||||||||||
Reported |
$ | 4,447 | $ | 3,531 | $ | 3,461 | $ | 3,204 | $ | 3,665 | 26 | 21 | ||||||||||||||||
Securitization adjustments (a) |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Managed total net revenue |
$ | 4,447 | $ | 5,148 | $ | 5,159 | $ | 4,868 | $ | 5,129 | (14 | ) | (13 | ) | ||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||
Reported |
$ | 3,512 | $ | 2,622 | $ | 3,269 | $ | 2,939 | $ | 3,189 | 34 | 10 | ||||||||||||||||
Securitization adjustments (a) |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Managed provision for credit losses |
$ | 3,512 | $ | 4,239 | $ | 4,967 | $ | 4,603 | $ | 4,653 | (17 | ) | (25 | ) | ||||||||||||||
BALANCE
SHEETS AVERAGE BALANCES |
||||||||||||||||||||||||||||
Total average assets |
||||||||||||||||||||||||||||
Reported |
$ | 156,968 | $ | 102,748 | $ | 109,362 | $ | 111,722 | $ | 118,418 | 53 | 33 | ||||||||||||||||
Securitization adjustments (a) |
N/A | 81,787 | 82,779 | 81,588 | 82,782 | NM | NM | |||||||||||||||||||||
Managed average assets |
$ | 156,968 | $ | 184,535 | $ | 192,141 | $ | 193,310 | $ | 201,200 | (15 | ) | (22 | ) | ||||||||||||||
CREDIT
QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||
Reported |
$ | 4,512 | $ | 2,222 | $ | 2,694 | $ | 2,689 | $ | 2,029 | 103 | 122 | ||||||||||||||||
Securitization adjustments (a) |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Managed net charge-offs |
$ | 4,512 | $ | 3,839 | $ | 4,392 | $ | 4,353 | $ | 3,493 | 18 | 29 | ||||||||||||||||
Net charge-off rates |
||||||||||||||||||||||||||||
Reported |
11.75 | % | 11.34 | % | 12.85 | % | 12.03 | % | 8.42 | % | ||||||||||||||||||
Securitized and unconsolidated (a) |
N/A | 7.51 | 7.83 | 7.91 | 6.93 | |||||||||||||||||||||||
Managed net charge-off rate |
11.75 | 9.33 | 10.30 | 10.03 | 7.72 |
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting
for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new
guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts. As a
result, reported and managed basis are comparable for periods ended after January 1, 2010. For
further discussion, see page 38 of this Financial
Supplement. N/A: Not applicable. |
Page 20
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Lending- and deposit-related fees |
$ | 277 | $ | 279 | $ | 269 | $ | 270 | $ | 263 | (1 | )% | 5 | % | ||||||||||||||
Asset management, administration and commissions |
37 | 35 | 35 | 36 | 34 | 6 | 9 | |||||||||||||||||||||
All other income (a) |
186 | 149 | 170 | 152 | 125 | 25 | 49 | |||||||||||||||||||||
Noninterest revenue |
500 | 463 | 474 | 458 | 422 | 8 | 18 | |||||||||||||||||||||
Net interest income |
916 | 943 | 985 | 995 | 980 | (3 | ) | (7 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
1,416 | 1,406 | 1,459 | 1,453 | 1,402 | 1 | 1 | |||||||||||||||||||||
Provision for credit losses |
214 | 494 | 355 | 312 | 293 | (57 | ) | (27 | ) | |||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
206 | 183 | 196 | 197 | 200 | 13 | 3 | |||||||||||||||||||||
Noncompensation expense |
324 | 351 | 339 | 327 | 342 | (8 | ) | (5 | ) | |||||||||||||||||||
Amortization of intangibles |
9 | 9 | 10 | 11 | 11 | | (18 | ) | ||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
539 | 543 | 545 | 535 | 553 | (1 | ) | (3 | ) | |||||||||||||||||||
Income before income tax expense |
663 | 369 | 559 | 606 | 556 | 80 | 19 | |||||||||||||||||||||
Income tax expense |
273 | 145 | 218 | 238 | 218 | 88 | 25 | |||||||||||||||||||||
NET INCOME |
$ | 390 | $ | 224 | $ | 341 | $ | 368 | $ | 338 | 74 | 15 | ||||||||||||||||
Revenue by product: |
||||||||||||||||||||||||||||
Lending |
$ | 658 | $ | 639 | $ | 675 | $ | 684 | $ | 665 | 3 | (1 | ) | |||||||||||||||
Treasury services |
638 | 645 | 672 | 679 | 646 | (1 | ) | (1 | ) | |||||||||||||||||||
Investment banking |
105 | 108 | 99 | 114 | 73 | (3 | ) | 44 | ||||||||||||||||||||
Other |
15 | 14 | 13 | (24 | ) | 18 | 7 | (17 | ) | |||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,416 | $ | 1,406 | $ | 1,459 | $ | 1,453 | $ | 1,402 | 1 | 1 | ||||||||||||||||
IB revenue, gross (b) |
$ | 311 | $ | 328 | $ | 301 | $ | 328 | $ | 206 | (5 | ) | 51 | |||||||||||||||
Revenue by client segment: |
||||||||||||||||||||||||||||
Middle Market Banking |
$ | 746 | $ | 760 | $ | 771 | $ | 772 | $ | 752 | (2 | ) | (1 | ) | ||||||||||||||
Commercial Term Lending |
229 | 191 | 232 | 224 | 228 | 20 | | |||||||||||||||||||||
Mid-Corporate Banking |
263 | 277 | 278 | 305 | 242 | (5 | ) | 9 | ||||||||||||||||||||
Real Estate Banking |
100 | 100 | 121 | 120 | 120 | | (17 | ) | ||||||||||||||||||||
Other |
78 | 78 | 57 | 32 | 60 | | 30 | |||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,416 | $ | 1,406 | $ | 1,459 | $ | 1,453 | $ | 1,402 | 1 | 1 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
ROE |
20 | % | 11 | % | 17 | % | 18 | % | 17 | % | ||||||||||||||||||
Overhead ratio |
38 | 39 | 37 | 37 | 39 |
(a) | Revenue from investment banking products sold to Commercial Banking (CB) clients and commercial card revenue is included in all other income. | |
(b) | Represents the total revenue related to investment banking products sold to CB clients. |
Page 21
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans retained |
$ | 95,435 | $ | 97,108 | $ | 101,608 | $ | 105,556 | $ | 110,923 | (2 | )% | (14 | )% | ||||||||||||||
Loans held-for-sale and loans at fair value |
294 | 324 | 288 | 296 | 272 | (9 | ) | 8 | ||||||||||||||||||||
Total loans |
95,729 | 97,432 | 101,896 | 105,852 | 111,195 | (2 | ) | (14 | ) | |||||||||||||||||||
Equity |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | |||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Total assets |
$ | 133,013 | $ | 129,948 | $ | 130,316 | $ | 137,283 | $ | 144,298 | 2 | (8 | ) | |||||||||||||||
Loans: |
||||||||||||||||||||||||||||
Loans retained |
96,317 | 99,794 | 103,752 | 108,750 | 113,568 | (3 | ) | (15 | ) | |||||||||||||||||||
Loans held-for-sale and loans at fair value |
297 | 386 | 297 | 288 | 297 | (23 | ) | | ||||||||||||||||||||
Total loans |
96,614 | 100,180 | 104,049 | 109,038 | 113,865 | (4 | ) | (15 | ) | |||||||||||||||||||
Liability balances (a) |
133,142 | 122,471 | 109,293 | 105,829 | 114,975 | 9 | 16 | |||||||||||||||||||||
Equity |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | |||||||||||||||||||||
Average loans by client segment: |
||||||||||||||||||||||||||||
Middle Market Banking |
$ | 33,919 | $ | 34,794 | $ | 36,200 | $ | 38,193 | $ | 40,728 | (3 | ) | (17 | ) | ||||||||||||||
Commercial Term Lending |
36,057 | 36,507 | 36,943 | 36,963 | 36,814 | (1 | ) | (2 | ) | |||||||||||||||||||
Mid-Corporate Banking |
12,258 | 13,510 | 14,933 | 17,012 | 18,416 | (9 | ) | (33 | ) | |||||||||||||||||||
Real Estate Banking |
10,438 | 11,133 | 11,547 | 12,347 | 13,264 | (6 | ) | (21 | ) | |||||||||||||||||||
Other |
3,942 | 4,236 | 4,426 | 4,523 | 4,643 | (7 | ) | (15 | ) | |||||||||||||||||||
Total Commercial Banking loans |
$ | 96,614 | $ | 100,180 | $ | 104,049 | $ | 109,038 | $ | 113,865 | (4 | ) | (15 | ) | ||||||||||||||
Headcount |
4,701 | 4,151 | 4,177 | 4,228 | 4,545 | 13 | 3 | |||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 229 | $ | 483 | $ | 291 | $ | 181 | $ | 134 | (53 | ) | 71 | |||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||
Nonperforming loans retained (b) |
2,947 | 2,764 | 2,284 | 2,090 | 1,531 | 7 | 92 | |||||||||||||||||||||
Nonperforming loans held-for-sale and loans at fair value |
49 | 37 | 18 | 21 | | 32 | NM | |||||||||||||||||||||
Total nonperforming loans |
2,996 | 2,801 | 2,302 | 2,111 | 1,531 | 7 | 96 | |||||||||||||||||||||
Nonperforming assets |
3,186 | 2,989 | 2,461 | 2,255 | 1,651 | 7 | 93 | |||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||
Allowance for loan losses |
3,007 | 3,025 | 3,063 | 3,034 | 2,945 | (1 | ) | 2 | ||||||||||||||||||||
Allowance for lending-related commitments |
359 | 349 | 300 | 272 | 240 | 3 | 50 | |||||||||||||||||||||
Total allowance for credit losses |
3,366 | 3,374 | 3,363 | 3,306 | 3,185 | | 6 | |||||||||||||||||||||
Net charge-off rate |
0.96 | % | 1.92 | % | 1.11 | % | 0.67 | % | 0.48 | % | ||||||||||||||||||
Allowance for loan losses to period-end loans retained |
3.15 | 3.12 | 3.01 | 2.87 | 2.65 | |||||||||||||||||||||||
Allowance for loan losses to average loans retained |
3.12 | 3.03 | 2.95 | 2.79 | 2.59 | |||||||||||||||||||||||
Allowance for loan losses to nonperforming loans retained |
102 | 109 | 134 | 145 | 192 | |||||||||||||||||||||||
Nonperforming loans to total period-end loans |
3.13 | 2.87 | 2.26 | 1.99 | 1.38 | |||||||||||||||||||||||
Nonperforming loans to total average loans |
3.10 | 2.80 | 2.21 | 1.94 | 1.34 |
(a) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. | |
(b) | Allowance for loan losses of $612 million, $581 million, $496 million, $460 million, and $352 million were held against nonperforming loans retained for the periods ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, and March 31, 2009, respectively. |
Page 22
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Lending- and deposit-related fees |
$ | 311 | $ | 330 | $ | 316 | $ | 314 | $ | 325 | (6 | )% | (4 | )% | ||||||||||||||
Asset management, administration and commissions |
659 | 675 | 620 | 710 | 626 | (2 | ) | 5 | ||||||||||||||||||||
All other income |
176 | 212 | 201 | 221 | 197 | (17 | ) | (11 | ) | |||||||||||||||||||
Noninterest revenue |
1,146 | 1,217 | 1,137 | 1,245 | 1,148 | (6 | ) | | ||||||||||||||||||||
Net interest income |
610 | 618 | 651 | 655 | 673 | (1 | ) | (9 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
1,756 | 1,835 | 1,788 | 1,900 | 1,821 | (4 | ) | (4 | ) | |||||||||||||||||||
Provision for credit losses |
(39 | ) | 53 | 13 | (5 | ) | (6 | ) | NM | NM | ||||||||||||||||||
Credit reimbursement to IB (a) |
(30 | ) | (30 | ) | (31 | ) | (30 | ) | (30 | ) | | | ||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
657 | 668 | 629 | 618 | 629 | (2 | ) | 4 | ||||||||||||||||||||
Noncompensation expense |
650 | 704 | 633 | 650 | 671 | (8 | ) | (3 | ) | |||||||||||||||||||
Amortization of intangibles |
18 | 19 | 18 | 20 | 19 | (5 | ) | (5 | ) | |||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,325 | 1,391 | 1,280 | 1,288 | 1,319 | (5 | ) | | ||||||||||||||||||||
Income before income tax expense |
440 | 361 | 464 | 587 | 478 | 22 | (8 | ) | ||||||||||||||||||||
Income tax expense |
161 | 124 | 162 | 208 | 170 | 30 | (5 | ) | ||||||||||||||||||||
NET INCOME |
$ | 279 | $ | 237 | $ | 302 | $ | 379 | $ | 308 | 18 | (9 | ) | |||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||
Treasury Services |
$ | 882 | $ | 918 | $ | 919 | $ | 934 | $ | 931 | (4 | ) | (5 | ) | ||||||||||||||
Worldwide Securities Services |
874 | 917 | 869 | 966 | 890 | (5 | ) | (2 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
$ | 1,756 | $ | 1,835 | $ | 1,788 | $ | 1,900 | $ | 1,821 | (4 | ) | (4 | ) | ||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
ROE |
17 | % | 19 | % | 24 | % | 30 | % | 25 | % | ||||||||||||||||||
Overhead ratio |
75 | 76 | 72 | 68 | 72 | |||||||||||||||||||||||
Pretax margin ratio (b) |
25 | 20 | 26 | 31 | 26 | |||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Loans (c) |
$ | 24,066 | $ | 18,972 | $ | 19,693 | $ | 17,929 | $ | 18,529 | 27 | 30 | ||||||||||||||||
Equity |
6,500 | 5,000 | 5,000 | 5,000 | 5,000 | 30 | 30 | |||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Total assets |
$ | 38,273 | $ | 36,589 | $ | 33,117 | $ | 35,520 | $ | 38,682 | 5 | (1 | ) | |||||||||||||||
Loans (c) |
19,578 | 18,888 | 17,062 | 17,524 | 20,140 | 4 | (3 | ) | ||||||||||||||||||||
Liability balances (d) |
247,905 | 250,695 | 231,502 | 234,163 | 276,486 | (1 | ) | (10 | ) | |||||||||||||||||||
Equity |
6,500 | 5,000 | 5,000 | 5,000 | 5,000 | 30 | 30 | |||||||||||||||||||||
Headcount |
27,223 | 26,609 | 26,389 | 27,252 | 26,998 | 2 | 1 |
(a) | IB credit portfolio group manages certain exposures on behalf of clients shared with TSS. TSS reimburses IB for a portion of the total cost of managing the credit portfolio. IB recognizes this credit reimbursement as a component of noninterest revenue. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors | |
(c) | Loan balances include wholesale overdrafts, commercial card and trade finance loans. | |
(d) | Liability balances include deposits and deposits swept to on-balance sheet liabilities, such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. |
Page 23
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
TSS FIRMWIDE DISCLOSURES |
||||||||||||||||||||||||||||
TS revenue reported |
$ | 882 | $ | 918 | $ | 919 | $ | 934 | $ | 931 | (4 | )% | (5 | )% | ||||||||||||||
TS revenue reported in CB |
638 | 645 | 672 | 679 | 646 | (1 | ) | (1 | ) | |||||||||||||||||||
TS revenue reported in other lines of business |
56 | 57 | 63 | 63 | 62 | (2 | ) | (10 | ) | |||||||||||||||||||
TS firmwide revenue (a) |
1,576 | 1,620 | 1,654 | 1,676 | 1,639 | (3 | ) | (4 | ) | |||||||||||||||||||
Worldwide Securities Services revenue |
874 | 917 | 869 | 966 | 890 | (5 | ) | (2 | ) | |||||||||||||||||||
TSS firmwide revenue (a) |
$ | 2,450 | $ | 2,537 | $ | 2,523 | $ | 2,642 | $ | 2,529 | (3 | ) | (3 | ) | ||||||||||||||
TS firmwide liability balances (average) (b) |
$ | 305,105 | $ | 289,024 | $ | 261,059 | $ | 258,312 | $ | 289,645 | 6 | 5 | ||||||||||||||||
TSS firmwide liability balances (average) (b) |
381,047 | 373,166 | 340,795 | 339,992 | 391,461 | 2 | (3 | ) | ||||||||||||||||||||
TSS FIRMWIDE FINANCIAL RATIOS |
||||||||||||||||||||||||||||
TS firmwide overhead ratio (c) |
55 | % | 54 | % | 52 | % | 51 | % | 53 | % | ||||||||||||||||||
TSS firmwide overhead ratio (c) |
65 | 66 | 62 | 59 | 63 | |||||||||||||||||||||||
FIRMWIDE BUSINESS METRICS |
||||||||||||||||||||||||||||
Assets under custody (in billions) |
$ | 15,283 | $ | 14,885 | $ | 14,887 | $ | 13,748 | $ | 13,532 | 3 | 13 | ||||||||||||||||
Number of: |
||||||||||||||||||||||||||||
US$ ACH transactions originated (in millions) |
949 | 975 | 965 | 978 | 978 | (3 | ) | (3 | ) | |||||||||||||||||||
Total US$ clearing volume (in thousands) |
28,669 | 29,493 | 28,604 | 28,193 | 27,186 | (3 | ) | 5 | ||||||||||||||||||||
International electronic funds transfer volume (in thousands) (d) |
55,754 | 53,354 | 48,533 | 47,096 | 44,365 | 4 | 26 | |||||||||||||||||||||
Wholesale check volume (in millions) |
478 | 514 | 530 | 572 | 568 | (7 | ) | (16 | ) | |||||||||||||||||||
Wholesale cards issued (in thousands) (e) |
27,352 | 27,138 | 26,977 | 25,501 | 23,757 | 1 | 15 | |||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | | $ | | $ | | $ | 17 | $ | 2 | | NM | ||||||||||||||||
Nonperforming loans |
14 | 14 | 14 | 14 | 30 | | (53 | ) | ||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||
Allowance for loan losses |
57 | 88 | 15 | 15 | 51 | (35 | ) | 12 | ||||||||||||||||||||
Allowance for lending-related commitments |
76 | 84 | 104 | 92 | 77 | (10 | ) | (1 | ) | |||||||||||||||||||
Total allowance for credit losses |
133 | 172 | 119 | 107 | 128 | (23 | ) | 4 | ||||||||||||||||||||
Net charge-offs rate |
| % | | % | | % | 0.39 | % | 0.04 | % | ||||||||||||||||||
Allowance for loan losses to period-end loans |
0.24 | 0.46 | 0.08 | 0.08 | 0.28 | |||||||||||||||||||||||
Allowance for loan losses to average loans |
0.29 | 0.47 | 0.09 | 0.09 | 0.25 | |||||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
407 | NM | 107 | 107 | 170 | |||||||||||||||||||||||
Nonperforming loans to period-end loans |
0.06 | 0.07 | 0.07 | 0.08 | 0.16 | |||||||||||||||||||||||
Nonperforming loans to average loans |
0.07 | 0.07 | 0.08 | 0.08 | 0.15 |
(a) | TSS firmwide revenue includes FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of IB. However, some of the FX revenue associated with TSS customers who are FX customers of IB is not included in TS and TSS firmwide revenue. These amounts were $137 million, $162 million, $154 million, $191 million, and $154 million for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, and March 31, 2009, respectively. | |
(b) | Firmwide liability balances include liability balances recorded in Commercial Banking. | |
(c) | Overhead ratios have been calculated based on firmwide revenue and TSS and TS expense, respectively, including those allocated to certain other lines of business. FX revenue and expense recorded in IB for TSS-related FX activity are not included in this ratio. | |
(d) | International electronic funds transfer includes non-U.S. dollar ACH and clearing volume. | |
(e) | Wholesale cards issued and outstanding include domestic commercial, stored value, prepaid and government electronic benefit card products. |
Page 24
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Asset management, administration and commissions |
$ | 1,508 | $ | 1,632 | $ | 1,443 | $ | 1,315 | $ | 1,231 | (8 | )% | 23 | % | ||||||||||||||
All other income |
266 | 191 | 238 | 253 | 69 | 39 | 286 | |||||||||||||||||||||
Noninterest revenue |
1,774 | 1,823 | 1,681 | 1,568 | 1,300 | (3 | ) | 36 | ||||||||||||||||||||
Net interest income |
357 | 372 | 404 | 414 | 403 | (4 | ) | (11 | ) | |||||||||||||||||||
TOTAL NET REVENUE |
2,131 | 2,195 | 2,085 | 1,982 | 1,703 | (3 | ) | 25 | ||||||||||||||||||||
Provision for credit losses |
35 | 58 | 38 | 59 | 33 | (40 | ) | 6 | ||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
910 | 907 | 858 | 810 | 800 | | 14 | |||||||||||||||||||||
Noncompensation expense |
514 | 543 | 474 | 525 | 479 | (5 | ) | 7 | ||||||||||||||||||||
Amortization of intangibles |
18 | 20 | 19 | 19 | 19 | (10 | ) | (5 | ) | |||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,442 | 1,470 | 1,351 | 1,354 | 1,298 | (2 | ) | 11 | ||||||||||||||||||||
Income before income tax expense |
654 | 667 | 696 | 569 | 372 | (2 | ) | 76 | ||||||||||||||||||||
Income tax expense |
262 | 243 | 266 | 217 | 148 | 8 | 77 | |||||||||||||||||||||
NET INCOME |
$ | 392 | $ | 424 | $ | 430 | $ | 352 | $ | 224 | (8 | ) | 75 | |||||||||||||||
REVENUE BY CLIENT SEGMENT |
||||||||||||||||||||||||||||
Private Bank |
$ | 698 | $ | 723 | $ | 639 | $ | 640 | $ | 583 | (3 | ) | 20 | |||||||||||||||
Institutional |
566 | 584 | 534 | 487 | 460 | (3 | ) | 23 | ||||||||||||||||||||
Retail |
415 | 445 | 471 | 411 | 253 | (7 | ) | 64 | ||||||||||||||||||||
Private Wealth Management |
343 | 331 | 339 | 334 | 312 | 4 | 10 | |||||||||||||||||||||
JPMorgan Securities (a) |
109 | 112 | 102 | 110 | 95 | (3 | ) | 15 | ||||||||||||||||||||
Total net revenue |
$ | 2,131 | $ | 2,195 | $ | 2,085 | $ | 1,982 | $ | 1,703 | (3 | ) | 25 | |||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||
ROE |
24 | % | 24 | % | 24 | % | 20 | % | 13 | % | ||||||||||||||||||
Overhead ratio |
68 | 67 | 65 | 68 | 76 | |||||||||||||||||||||||
Pretax margin ratio (b) |
31 | 30 | 33 | 29 | 22 | |||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||
Client advisors |
1,987 | 1,934 | 1,891 | 1,838 | 1,872 | 3 | 6 | |||||||||||||||||||||
Retirement planning services participants (in thousands) |
1,651 | 1,628 | 1,620 | 1,595 | 1,628 | 1 | 1 | |||||||||||||||||||||
JPMorgan Securities brokers (a) |
390 | 376 | 365 | 362 | 359 | 4 | 9 | |||||||||||||||||||||
% of customer assets in 4 & 5 Star Funds (c) |
43 | % | 42 | % | 39 | % | 45 | % | 42 | % | 2 | 2 | ||||||||||||||||
% of AUM in 1st and 2nd quartiles: (d) |
||||||||||||||||||||||||||||
1 year |
55 | % | 57 | % | 60 | % | 62 | % | 54 | % | (4 | ) | 2 | |||||||||||||||
3 years |
67 | % | 62 | % | 70 | % | 69 | % | 62 | % | 8 | 8 | ||||||||||||||||
5 years |
77 | % | 74 | % | 74 | % | 80 | % | 66 | % | 4 | 17 | ||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||
Loans |
$ | 37,088 | $ | 37,755 | $ | 35,925 | $ | 35,474 | $ | 33,944 | (2 | ) | 9 | |||||||||||||||
Equity |
6,500 | 7,000 | 7,000 | 7,000 | 7,000 | (7 | ) | (7 | ) | |||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||
Total assets |
$ | 62,525 | $ | 63,036 | $ | 60,345 | $ | 59,334 | $ | 58,227 | (1 | ) | 7 | |||||||||||||||
Loans |
36,602 | 36,137 | 34,822 | 34,292 | 34,585 | 1 | 6 | |||||||||||||||||||||
Deposits |
80,662 | 77,352 | 73,649 | 75,355 | 81,749 | 4 | (1 | ) | ||||||||||||||||||||
Equity |
6,500 | 7,000 | 7,000 | 7,000 | 7,000 | (7 | ) | (7 | ) | |||||||||||||||||||
Headcount |
15,321 | 15,136 | 14,919 | 14,840 | 15,109 | 1 | 1 | |||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||
Net charge-offs |
$ | 28 | $ | 35 | $ | 17 | $ | 46 | $ | 19 | (20 | ) | 47 | |||||||||||||||
Nonperforming loans |
475 | 580 | 409 | 313 | 301 | (18 | ) | 58 | ||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||
Allowance for loan losses |
261 | 269 | 251 | 226 | 215 | (3 | ) | 21 | ||||||||||||||||||||
Allowance for lending-related commitments |
13 | 9 | 5 | 4 | 4 | 44 | 225 | |||||||||||||||||||||
Total allowance for credit losses |
274 | 278 | 256 | 230 | 219 | (1 | ) | 25 | ||||||||||||||||||||
Net charge-off rate |
0.31 | % | 0.38 | % | 0.19 | % | 0.54 | % | 0.22 | % | ||||||||||||||||||
Allowance for loan losses to period-end loans |
0.70 | 0.71 | 0.70 | 0.64 | 0.63 | |||||||||||||||||||||||
Allowance for loan losses to average loans |
0.71 | 0.74 | 0.72 | 0.66 | 0.62 | |||||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
55 | 46 | 61 | 72 | 71 | |||||||||||||||||||||||
Nonperforming loans to period-end loans |
1.28 | 1.54 | 1.14 | 0.88 | 0.89 | |||||||||||||||||||||||
Nonperforming loans to average loans |
1.30 | 1.61 | 1.17 | 0.91 | 0.87 |
(a) | JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(c) | Derived from Morningstar for the United States, the United Kingdom, Luxembourg, France, Hong Kong and Taiwan; and Nomura for Japan. | |
(d) | Quartile ranking sourced from Lipper for the United States and Taiwan; Morningstar for the United Kingdom, Luxembourg, France and Hong Kong; and Nomura for Japan. |
Page 25
March 31, 2010 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Mar 31 | ||||||||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||||||
ASSETS UNDER SUPERVISION (a) |
||||||||||||||||||||||||||||
Assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 521 | $ | 591 | $ | 634 | $ | 617 | $ | 625 | (12 | )% | (17 | )% | ||||||||||||||
Fixed income |
246 | 226 | 215 | 194 | 180 | 9 | 37 | |||||||||||||||||||||
Equities and multi-asset |
355 | 339 | 316 | 264 | 215 | 5 | 65 | |||||||||||||||||||||
Alternatives |
97 | 93 | 94 | 96 | 95 | 4 | 2 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
1,219 | 1,249 | 1,259 | 1,171 | 1,115 | (2 | ) | 9 | ||||||||||||||||||||
Custody / brokerage / administration / deposits |
488 | 452 | 411 | 372 | 349 | 8 | 40 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,707 | $ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | | 17 | ||||||||||||||||
Assets by client segment |
||||||||||||||||||||||||||||
Institutional |
$ | 669 | $ | 709 | $ | 737 | $ | 697 | $ | 668 | (6 | ) | | |||||||||||||||
Private Bank |
184 | 187 | 180 | 179 | 181 | (2 | ) | 2 | ||||||||||||||||||||
Retail |
282 | 270 | 256 | 216 | 184 | 4 | 53 | |||||||||||||||||||||
Private Wealth Management |
70 | 69 | 71 | 67 | 68 | 1 | 3 | |||||||||||||||||||||
JPMorgan Securities (b) |
14 | 14 | 15 | 12 | 14 | | | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,219 | $ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | (2 | ) | 9 | |||||||||||||||
Institutional |
$ | 670 | $ | 710 | $ | 737 | $ | 697 | $ | 669 | (6 | ) | | |||||||||||||||
Private Bank |
476 | 452 | 414 | 390 | 375 | 5 | 27 | |||||||||||||||||||||
Retail |
371 | 355 | 339 | 289 | 250 | 5 | 48 | |||||||||||||||||||||
Private Wealth Management |
133 | 129 | 131 | 123 | 120 | 3 | 11 | |||||||||||||||||||||
JPMorgan Securities (b) |
57 | 55 | 49 | 44 | 50 | 4 | 14 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,707 | $ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | | 17 | ||||||||||||||||
Assets by geographic region |
||||||||||||||||||||||||||||
U.S. / Canada |
$ | 815 | $ | 837 | $ | 862 | $ | 814 | $ | 789 | (3 | ) | 3 | |||||||||||||||
International |
404 | 412 | 397 | 357 | 326 | (2 | ) | 24 | ||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,219 | $ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | (2 | ) | 9 | |||||||||||||||
U.S. / Canada |
$ | 1,189 | $ | 1,182 | $ | 1,179 | $ | 1,103 | $ | 1,066 | 1 | 12 | ||||||||||||||||
International |
518 | 519 | 491 | 440 | 398 | | 30 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,707 | $ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | | 17 | ||||||||||||||||
Mutual fund assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 470 | $ | 539 | $ | 576 | $ | 569 | $ | 570 | (13 | ) | (18 | ) | ||||||||||||||
Fixed income |
76 | 67 | 57 | 48 | 42 | 13 | 81 | |||||||||||||||||||||
Equities |
150 | 143 | 133 | 111 | 85 | 5 | 76 | |||||||||||||||||||||
Alternatives |
9 | 9 | 10 | 9 | 8 | | 13 | |||||||||||||||||||||
TOTAL MUTUAL FUND ASSETS |
$ | 705 | $ | 758 | $ | 776 | $ | 737 | $ | 705 | (7 | ) | | |||||||||||||||
(a) | Excludes assets under management of American Century Companies, Inc. in which the Firm has had a 42% ownership in all the periods presented. | |
(b) | JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. |
Page 26
QUARTERLY TRENDS | ||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | ||||||||||||||||
ASSETS UNDER SUPERVISION (continued) |
||||||||||||||||||||
Assets under management rollforward |
||||||||||||||||||||
Beginning balance |
$ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | $ | 1,133 | ||||||||||
Net asset flows: |
||||||||||||||||||||
Liquidity |
(62 | ) | (44 | ) | 9 | (7 | ) | 19 | ||||||||||||
Fixed income |
16 | 12 | 13 | 8 | 1 | |||||||||||||||
Equities, multi-asset and alternatives |
6 | 8 | 12 | 2 | (5 | ) | ||||||||||||||
Market / performance / other impacts |
10 | 14 | 54 | 53 | (33 | ) | ||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,219 | $ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | ||||||||||
Assets under supervision rollforward |
||||||||||||||||||||
Beginning balance |
$ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | ||||||||||
Net asset flows |
(10 | ) | (11 | ) | 45 | (9 | ) | 25 | ||||||||||||
Market / performance / other impacts |
16 | 42 | 82 | 88 | (57 | ) | ||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,707 | $ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | ||||||||||
Page 27
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 CHANGE | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||
Principal transactions |
$ | 547 | $ | 715 | $ | 1,109 | $ | 1,243 | $ | (1,493 | ) | (23 | )% | NM | % | |||||||||||||
Securities gains |
610 | 378 | 181 | 366 | 214 | 61 | 185 | |||||||||||||||||||||
All other income |
124 | 13 | 273 | (209 | ) | (19 | ) | NM | NM | |||||||||||||||||||
Noninterest revenue |
1,281 | 1,106 | 1,563 | 1,400 | (1,298 | ) | 16 | NM | ||||||||||||||||||||
Net interest income |
1,076 | 978 | 1,031 | 865 | 989 | 10 | 9 | |||||||||||||||||||||
TOTAL NET REVENUE |
2,357 | 2,084 | 2,594 | 2,265 | (309 | ) | 13 | NM | ||||||||||||||||||||
Provision for credit losses |
17 | 9 | 62 | 9 | | 89 | NM | |||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||
Compensation expense |
475 | 747 | 768 | 655 | 641 | (36 | ) | (26 | ) | |||||||||||||||||||
Noncompensation expense (a) |
3,041 | 1,058 | 875 | 1,319 | 345 | 187 | NM | |||||||||||||||||||||
Merger costs |
| 30 | 103 | 143 | 205 | NM | NM | |||||||||||||||||||||
Subtotal |
3,516 | 1,835 | 1,746 | 2,117 | 1,191 | 92 | 195 | |||||||||||||||||||||
Net expense allocated to other businesses |
(1,180 | ) | (1,219 | ) | (1,243 | ) | (1,253 | ) | (1,279 | ) | 3 | 8 | ||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,336 | 616 | 503 | 864 | (88 | ) | 279 | NM | ||||||||||||||||||||
Income/(loss) before income tax expense
(benefit) |
||||||||||||||||||||||||||||
and extraordinary gain |
4 | 1,459 | 2,029 | 1,392 | (221 | ) | (100 | ) | NM | |||||||||||||||||||
Income tax expense/(benefit) (b) |
(224 | ) | 262 | 818 | 584 | 41 | NM | NM | ||||||||||||||||||||
Income/(loss) before extraordinary gain |
228 | 1,197 | 1,211 | 808 | (262 | ) | (81 | ) | NM | |||||||||||||||||||
Extraordinary gain (c) |
| | 76 | | | | | |||||||||||||||||||||
NET INCOME/(LOSS) |
$ | 228 | $ | 1,197 | $ | 1,287 | $ | 808 | $ | (262 | ) | (81 | ) | NM | ||||||||||||||
MEMO: |
||||||||||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||
Private equity |
$ | 115 | $ | 296 | $ | 172 | $ | (1 | ) | $ | (449 | ) | (61 | ) | NM | |||||||||||||
Corporate |
2,242 | 1,788 | 2,422 | 2,266 | 140 | 25 | NM | |||||||||||||||||||||
TOTAL NET REVENUE |
$ | 2,357 | $ | 2,084 | $ | 2,594 | $ | 2,265 | $ | (309 | ) | 13 | NM | |||||||||||||||
NET INCOME/(LOSS) |
||||||||||||||||||||||||||||
Private equity |
$ | 55 | $ | 141 | $ | 88 | $ | (27 | ) | $ | (280 | ) | (61 | ) | NM | |||||||||||||
Corporate (d) |
173 | 1,056 | 1,199 | 835 | 18 | (84 | ) | NM | ||||||||||||||||||||
TOTAL NET INCOME/(LOSS) |
$ | 228 | $ | 1,197 | $ | 1,287 | $ | 808 | $ | (262 | ) | (81 | ) | NM | ||||||||||||||
Headcount |
19,307 | 20,119 | 20,747 | 21,522 | 22,339 | (4 | ) | (14 | ) |
(a) | The first quarter of 2010 includes a $2.3 billion increase reflecting increased litigation reserves, including those for mortgage-related matters. The second quarter of 2009 included a $675 million FDIC special assessment. | |
(b) | The income tax expense in the first quarter of 2010 and fourth quarter of 2009 includes tax benefits recognized upon the resolution of tax audits. | |
(c) | On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. The acquisition resulted in negative goodwill, and accordingly, the Firm recognized an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. | |
(d) | The 2009 periods included merger costs and extraordinary gain related to the Washington Mutual transaction, as well as items related to the Bear Stearns merger, including merger costs, asset management liquidation costs and Bear Stearns Private Client Services (which was renamed to JPMorgan Securities effective January 2010) broker retention expense. |
Page 28
QUARTERLY TRENDS | |||||||||||||||||||||||||||||
1Q10 Change | |||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | |||||||||||||||||||||||
SUPPLEMENTAL |
|||||||||||||||||||||||||||||
TREASURY and CIO |
|||||||||||||||||||||||||||||
Securities gains (a) |
$ | 610 | $ | 378 | $ | 181 | $ | 374 | $ | 214 | 61 | % | 185 | % | |||||||||||||||
Investment securities portfolio (average) |
330,584 | 353,224 | 339,745 | 336,263 | 265,785 | (6 | ) | 24 | |||||||||||||||||||||
Investment securities portfolio (ending) |
337,442 | 340,163 | 351,823 | 326,414 | 316,498 | (1 | ) | 7 | |||||||||||||||||||||
Mortgage loans (average) |
8,162 | 7,794 | 7,469 | 7,228 | 7,210 | 5 | 13 | ||||||||||||||||||||||
Mortgage loans (ending) |
8,368 | 8,023 | 7,665 | 7,368 | 7,162 | 4 | 17 | ||||||||||||||||||||||
PRIVATE EQUITY |
|||||||||||||||||||||||||||||
Private equity gains/(losses) |
|||||||||||||||||||||||||||||
Direct investments |
|||||||||||||||||||||||||||||
Realized gains |
$ | 113 | $ | 12 | $ | 57 | $ | 25 | $ | 15 | NM | NM | |||||||||||||||||
Unrealized gains/(losses) (b) |
(75 | ) | 224 | 88 | 16 | (409 | ) | NM | 82 | ||||||||||||||||||||
Total direct investments |
38 | 236 | 145 | 41 | (394 | ) | (84 | ) | NM | ||||||||||||||||||||
Third-party fund investments |
98 | 37 | 10 | (61 | ) | (68 | ) | 165 | NM | ||||||||||||||||||||
Total private equity gains/(losses) (c) |
$ | 136 | $ | 273 | $ | 155 | $ | (20 | ) | $ | (462 | ) | (50 | ) | NM | ||||||||||||||
Private equity portfolio information |
|||||||||||||||||||||||||||||
Direct investments |
|||||||||||||||||||||||||||||
Publicly-held securities |
|||||||||||||||||||||||||||||
Carrying value |
$ | 910 | $ | 762 | $ | 674 | $ | 431 | $ | 305 | 19 | 198 | |||||||||||||||||
Cost |
813 | 743 | 751 | 778 | 778 | 9 | 4 | ||||||||||||||||||||||
Quoted public value |
982 | 791 | 720 | 477 | 346 | 24 | 184 | ||||||||||||||||||||||
Privately-held direct securities |
|||||||||||||||||||||||||||||
Carrying value |
4,762 | 5,104 | 4,722 | 4,709 | 4,708 | (7 | ) | 1 | |||||||||||||||||||||
Cost |
5,775 | 5,959 | 5,823 | 5,627 | 5,519 | (3 | ) | 5 | |||||||||||||||||||||
Third-party fund investments (d) |
|||||||||||||||||||||||||||||
Carrying value |
1,603 | 1,459 | 1,440 | 1,420 | 1,537 | 10 | 4 | ||||||||||||||||||||||
Cost |
2,134 | 2,079 | 2,068 | 2,055 | 2,082 | 3 | 2 | ||||||||||||||||||||||
Total private equity portfolio Carrying value |
$ | 7,275 | $ | 7,325 | $ | 6,836 | $ | 6,560 | $ | 6,550 | (1 | ) | 11 | ||||||||||||||||
Total private equity portfolio Cost |
$ | 8,722 | $ | 8,781 | $ | 8,642 | $ | 8,460 | $ | 8,379 | (1 | ) | 4 | ||||||||||||||||
(a) | All periods reflect repositioning of the Corporate investment securities portfolio, and exclude gains/losses on securities used to manage risk associated with MSRs. | |
(b) | Unrealized gains (losses) contain reversals of unrealized gains and losses that were recognized in prior periods and have now been realized. | |
(c) | Included in principal transactions revenue in the Consolidated Statements of Income. | |
(d) | Unfunded commitments to third-party private equity funds were $1.4 billion, $1.5 billion, $1.4 billion, $1.5 billion and $1.5 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. |
Page 29
March 31, 2010 Change | ||||||||||||||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Mar 31 | ||||||||||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||||||||
CREDIT EXPOSURE |
||||||||||||||||||||||||||||||
WHOLESALE (a) |
||||||||||||||||||||||||||||||
Loans retained (b) |
$ | 210,211 | $ | 200,077 | $ | 213,718 | $ | 224,080 | $ | 230,534 | 5 | % | (9 | )% | ||||||||||||||||
Loans held-for-sale and loans at fair value |
4,079 | 4,098 | 5,235 | 7,545 | 11,750 | | (65 | ) | ||||||||||||||||||||||
TOTAL WHOLESALE LOANS REPORTED |
214,290 | 204,175 | 218,953 | 231,625 | 242,284 | 5 | (12 | ) | ||||||||||||||||||||||
CONSUMER (c) |
||||||||||||||||||||||||||||||
Home loan portfolio excluding purchased
credit-impaired loans: |
||||||||||||||||||||||||||||||
Home equity |
97,642 | 101,425 | 104,795 | 108,229 | 111,781 | (4 | ) | (13 | ) | |||||||||||||||||||||
Prime mortgage (b) |
68,210 | 66,892 | 67,597 | 68,878 | 71,731 | 2 | (5 | ) | ||||||||||||||||||||||
Subprime mortgage (b) |
13,219 | 12,526 | 13,270 | 13,825 | 14,594 | 6 | (9 | ) | ||||||||||||||||||||||
Option ARMs (b) |
8,644 | 8,536 | 8,852 | 9,034 | 8,940 | 1 | (3 | ) | ||||||||||||||||||||||
Total home loan portfolio excluding purchased
credit-impaired loans |
187,715 | 189,379 | 194,514 | 199,966 | 207,046 | (1 | ) | (9 | ) | |||||||||||||||||||||
Home loan portfolio purchased credit-impaired loans: (d) |
||||||||||||||||||||||||||||||
Home equity |
26,012 | 26,520 | 27,088 | 27,729 | 28,366 | (2 | ) | (8 | ) | |||||||||||||||||||||
Prime mortgage |
19,203 | 19,693 | 20,229 | 20,807 | 21,398 | (2 | ) | (10 | ) | |||||||||||||||||||||
Subprime mortgage |
5,848 | 5,993 | 6,135 | 6,341 | 6,565 | (2 | ) | (11 | ) | |||||||||||||||||||||
Option ARMs |
28,260 | 29,039 | 29,750 | 30,529 | 31,243 | (3 | ) | (10 | ) | |||||||||||||||||||||
Total home loan portfolio purchased credit-impaired
loans |
79,323 | 81,245 | 83,202 | 85,406 | 87,572 | (2 | ) | (9 | ) | |||||||||||||||||||||
Other consumer: |
||||||||||||||||||||||||||||||
Auto (b) |
47,381 | 46,031 | 44,309 | 42,887 | 43,065 | 3 | 10 | |||||||||||||||||||||||
Credit card reported: |
||||||||||||||||||||||||||||||
Loans excluding those held by the WaMu Master Trust (b) |
149,260 | 77,784 | 75,207 | 80,722 | 90,911 | 92 | 64 | |||||||||||||||||||||||
Loans held by the WaMu Master Trust (e) |
| 1,002 | 3,008 | 5,014 | | NM | | |||||||||||||||||||||||
Total credit card reported |
149,260 | 78,786 | 78,215 | 85,736 | 90,911 | 89 | 64 | |||||||||||||||||||||||
Other loans (b) |
32,951 | 31,700 | 32,405 | 33,041 | 33,700 | 4 | (2 | ) | ||||||||||||||||||||||
Loans retained |
496,630 | 427,141 | 432,645 | 447,036 | 462,294 | 16 | 7 | |||||||||||||||||||||||
Loans held-for-sale (f) |
2,879 | 2,142 | 1,546 | 1,940 | 3,665 | 34 | (21 | ) | ||||||||||||||||||||||
TOTAL CONSUMER LOANS REPORTED |
499,509 | 429,283 | 434,191 | 448,976 | 465,959 | 16 | 7 | |||||||||||||||||||||||
TOTAL LOANS REPORTED |
713,799 | 633,458 | 653,144 | 680,601 | 708,243 | 13 | 1 | |||||||||||||||||||||||
Credit card securitized and unconsolidated (b) |
N/A | 84,626 | 87,028 | 85,790 | 85,220 | NM | NM | |||||||||||||||||||||||
TOTAL MANAGED LOANS (b) |
713,799 | 718,084 | 740,172 | 766,391 | 793,463 | (1 | ) | (10 | ) | |||||||||||||||||||||
Derivative receivables |
79,416 | 80,210 | 94,065 | 97,491 | 131,247 | (1 | ) | (39 | ) | |||||||||||||||||||||
Receivables from customers |
16,314 | 15,745 | 13,148 | 12,977 | 14,504 | 4 | 12 | |||||||||||||||||||||||
Interests in purchased receivables (b) |
2,579 | 2,927 | 2,329 | 2,972 | | (12 | ) | NM | ||||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS |
812,108 | 816,966 | 849,714 | 879,831 | 939,214 | (1 | ) | (14 | ) | |||||||||||||||||||||
Wholesale lending-related commitments (b) |
326,921 | 347,155 | 343,135 | 343,991 | 363,013 | (6 | ) | (10 | ) | |||||||||||||||||||||
TOTAL |
$ | 1,139,029 | $ | 1,164,121 | $ | 1,192,849 | $ | 1,223,822 | $ | 1,302,227 | (2 | ) | (13 | ) | ||||||||||||||||
Memo: Total by category |
||||||||||||||||||||||||||||||
Total wholesale exposure (g) |
$ | 639,520 | $ | 650,212 | $ | 671,630 | $ | 689,056 | $ | 751,048 | (2 | ) | (15 | ) | ||||||||||||||||
Total consumer loans (b) (h) |
499,509 | 513,909 | 521,219 | 534,766 | 551,179 | (3 | ) | (9 | ) | |||||||||||||||||||||
Total |
$ | 1,139,029 | $ | 1,164,121 | $ | 1,192,849 | $ | 1,223,822 | $ | 1,302,227 | (2 | ) | (13 | ) | ||||||||||||||||
Risk profile of wholesale credit exposure: |
||||||||||||||||||||||||||||||
Investment-grade |
$ | 457,471 | $ | 460,702 | $ | 474,005 | $ | 491,168 | $ | 546,968 | (1 | ) | (16 | ) | ||||||||||||||||
Noninvestment-grade: |
||||||||||||||||||||||||||||||
Noncriticized |
129,368 | 133,557 | 141,578 | 141,408 | 147,891 | (3 | ) | (13 | ) | |||||||||||||||||||||
Criticized performing |
23,451 | 26,095 | 27,217 | 26,453 | 25,320 | (10 | ) | (7 | ) | |||||||||||||||||||||
Criticized nonperforming |
6,258 | 7,088 | 8,118 | 6,533 | 4,615 | (12 | ) | 36 | ||||||||||||||||||||||
Total noninvestment-grade |
159,077 | 166,740 | 176,913 | 174,394 | 177,826 | (5 | ) | (11 | ) | |||||||||||||||||||||
Loans held-for-sale and loans at fair value |
4,079 | 4,098 | 5,235 | 7,545 | 11,750 | | (65 | ) | ||||||||||||||||||||||
Receivables from customers |
16,314 | 15,745 | 13,148 | 12,977 | 14,504 | 4 | 12 | |||||||||||||||||||||||
Interests in purchased receivables (b) |
2,579 | 2,927 | 2,329 | 2,972 | | (12 | ) | NM | ||||||||||||||||||||||
Total wholesale exposure |
$ | 639,520 | $ | 650,212 | $ | 671,630 | $ | 689,056 | $ | 751,048 | (2 | ) | (15 | ) | ||||||||||||||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management. | |
(b) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated: $84.7 billion of loans associated with Firm-sponsored credit card securitization trusts; $17.7 billion of assets associated with Firm-administered multi-seller conduits, of which $2.5 billion related to interests in purchased receivables and $15.1 billion related to wholesale loans; and $4.8 billion of loans associated with certain other consumer loan securitization entities, primarily mortgage-related. Furthermore, $17.2 billion of net lending-related commitments associated with the conduits were eliminated upon consolidation. As a result of the consolidation of the credit card securitization trusts, reported and managed basis are equivalent for periods beginning after January 1, 2010. For further discussion, see page 38 of this Financial Supplement. | |
(c) | Includes Retail Financial Services, Card Services and residential mortgage loans reported in the Corporate/Private Equity segment to be risk managed by the Chief Investment Office. | |
(d) | Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chases acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the underlying loans are contractually past due. | |
(e) | Represents the remaining balance of loans measured at fair value within the Washington Mutual Master Trust that were consolidated onto the Firms balance sheet during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009 and June 30, 2009. | |
(f) | Included loans for prime mortgage of $558 million, $450 million, $187 million, $589 million and $825 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively, and other (largely student loans) of $2.3 billion, $1.7 billion, $1.4 billion, $1.4 billion and $2.8 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively, | |
(g) | Primarily represents total wholesale loans, derivative receivables, wholesale lending-related commitments and receivables from customers. | |
(h) | Represents total consumer loans and excludes consumer lending-related commitments. | |
Note: The risk profile is based on JPMorgan Chases internal risk ratings, which generally
correspond to the following ratings as defined by Standard &
Poors / Moodys: Investment-Grade:
AAA / Aaa to BBB- / Baa3; Noninvestment-Grade: BB+ / Ba1 and
below. N/A: Not Applicable. |
Page 30
March 31, 2010 Change | ||||||||||||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Mar 31 | ||||||||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS |
||||||||||||||||||||||||||||
WHOLESALE LOANS |
||||||||||||||||||||||||||||
Loans retained |
$ | 5,895 | $ | 6,559 | $ | 7,494 | $ | 5,829 | $ | 3,605 | (10 | )% | 64 | % | ||||||||||||||
Loans held-for-sale and loans at fair value |
331 | 345 | 146 | 133 | 57 | (4 | ) | 481 | ||||||||||||||||||||
TOTAL WHOLESALE LOANS |
6,226 | 6,904 | 7,640 | 5,962 | 3,662 | (10 | ) | 70 | ||||||||||||||||||||
CONSUMER LOANS (a) |
||||||||||||||||||||||||||||
Home loan portfolio
(includes RFS and Corporate/Private
Equity): |
||||||||||||||||||||||||||||
Home equity |
1,427 | 1,665 | 1,598 | 1,487 | 1,591 | (14 | ) | (10 | ) | |||||||||||||||||||
Prime mortgage |
4,579 | 4,355 | 4,007 | 3,501 | 2,712 | 5 | 69 | |||||||||||||||||||||
Subprime mortgage |
3,331 | 3,248 | 3,233 | 2,773 | 2,545 | 3 | 31 | |||||||||||||||||||||
Option ARMs |
348 | 312 | 244 | 182 | 97 | 12 | 259 | |||||||||||||||||||||
Total home loan portfolio |
9,685 | 9,580 | 9,082 | 7,943 | 6,945 | 1 | 39 | |||||||||||||||||||||
Auto loans |
174 | 177 | 179 | 154 | 165 | (2 | ) | 5 | ||||||||||||||||||||
Credit card reported |
3 | 3 | 3 | 4 | 4 | | (25 | ) | ||||||||||||||||||||
Other loans |
962 | 900 | 863 | 722 | 625 | 7 | 54 | |||||||||||||||||||||
TOTAL CONSUMER LOANS (b) (c) |
10,824 | 10,660 | 10,127 | 8,823 | 7,739 | 2 | 40 | |||||||||||||||||||||
TOTAL NONPERFORMING LOANS REPORTED |
17,050 | 17,564 | 17,767 | 14,785 | 11,401 | (3 | ) | 50 | ||||||||||||||||||||
Derivative receivables |
363 | 529 | 624 | 704 | 1,010 | (31 | ) | (64 | ) | |||||||||||||||||||
Assets acquired in loan satisfactions |
1,606 | 1,648 | 1,971 | 2,028 | 2,243 | (3 | ) | (28 | ) | |||||||||||||||||||
TOTAL NONPERFORMING ASSETS (b) |
$ | 19,019 | $ | 19,741 | $ | 20,362 | $ | 17,517 | $ | 14,654 | (4 | ) | 30 | |||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL
LOANS REPORTED (d) |
2.39 | % | 2.77 | % | 2.72 | % | 2.17 | % | 1.61 | % | ||||||||||||||||||
NONPERFORMING ASSETS BY LOB |
||||||||||||||||||||||||||||
Investment Bank |
$ | 3,289 | $ | 4,236 | $ | 5,782 | $ | 4,534 | $ | 3,041 | (22 | ) | 8 | |||||||||||||||
Retail Financial Services (c) |
11,974 | 11,864 | 11,641 | 10,351 | 9,582 | 1 | 25 | |||||||||||||||||||||
Card Services |
3 | 3 | 3 | 4 | 4 | | (25 | ) | ||||||||||||||||||||
Commercial Banking |
3,186 | 2,989 | 2,461 | 2,255 | 1,651 | 7 | 93 | |||||||||||||||||||||
Treasury & Securities Services |
14 | 14 | 14 | 14 | 30 | | (53 | ) | ||||||||||||||||||||
Asset Management |
498 | 582 | 422 | 326 | 319 | (14 | ) | 56 | ||||||||||||||||||||
Corporate/Private Equity (e) |
55 | 53 | 39 | 33 | 27 | 4 | 104 | |||||||||||||||||||||
TOTAL |
$ | 19,019 | $ | 19,741 | $ | 20,362 | $ | 17,517 | $ | 14,654 | (4 | ) | 30 | |||||||||||||||
(a) | There were no nonperforming loans held-for-sale for any of the periods presented. | |
(b) | Nonperforming assets exclude: (1) mortgage loans insured by U.S. government agencies of $10.5 billion, $9.0 billion, $7.0 billion, $4.2 billion and $4.2 billion at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; (2) real estate owned insured by U.S. government agencies of $707 million, $579 million, $579 million, $508 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $660 million, $542 million, $511 million, $473 million and $433 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. These amounts are excluded, as reimbursement is proceeding normally. In addition, the Firms policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. Under guidance issued by the Federal Financial Institutions Examination Council, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier. | |
(c) | Excludes home lending purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. Also excludes loans held-for-sale and loans at fair value. | |
(d) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related; overall, $104.6 billion of related loans were recorded on-balance sheet. For further discussion, see page 38 of this Financial Supplement. | |
(e) | Predominantly relates to held-for-investment prime mortgage. |
Page 31
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
GROSS
CHARGE-OFFS (a) |
||||||||||||||||||||||||||||
Wholesale loans |
$ | 1,014 | $ | 1,230 | $ | 1,093 | $ | 697 | $ | 206 | (18 | )% | 392 | % | ||||||||||||||
Consumer loans (includes RFS and
Corporate/Private Equity) |
2,555 | 2,825 | 2,634 | 2,718 | 2,244 | (10 | ) | 14 | ||||||||||||||||||||
Credit card loans reported |
4,882 | 2,405 | 2,894 | 2,883 | 2,189 | 103 | 123 | |||||||||||||||||||||
Total loans reported |
8,451 | 6,460 | 6,621 | 6,298 | 4,639 | 31 | 82 | |||||||||||||||||||||
Credit card loans securitized and
unconsolidated |
N/A | 1,733 | 1,810 | 1,776 | 1,579 | NM | NM | |||||||||||||||||||||
Total loans managed |
8,451 | 8,193 | 8,431 | 8,074 | 6,218 | 3 | 36 | |||||||||||||||||||||
RECOVERIES
(a) |
||||||||||||||||||||||||||||
Wholesale loans |
55 | 26 | 35 | 18 | 15 | 112 | 267 | |||||||||||||||||||||
Consumer loans (includes RFS and
Corporate/Private Equity) |
116 | 74 | 13 | 67 | 68 | 57 | 71 | |||||||||||||||||||||
Credit card loans reported |
370 | 183 | 200 | 194 | 160 | 102 | 131 | |||||||||||||||||||||
Total loans reported |
541 | 283 | 248 | 279 | 243 | 91 | 123 | |||||||||||||||||||||
Credit card loans securitized and
unconsolidated |
N/A | 116 | 112 | 112 | 115 | NM | NM | |||||||||||||||||||||
Total loans managed |
541 | 399 | 360 | 391 | 358 | 36 | 51 | |||||||||||||||||||||
NET
CHARGE-OFFS (a) |
||||||||||||||||||||||||||||
Wholesale loans |
959 | 1,204 | 1,058 | 679 | 191 | (20 | ) | 402 | ||||||||||||||||||||
Consumer loans (including RFS and Corporate/
Private Equity) |
2,439 | 2,751 | 2,621 | 2,651 | 2,176 | (11 | ) | 12 | ||||||||||||||||||||
Credit card loans reported |
4,512 | 2,222 | 2,694 | 2,689 | 2,029 | 103 | 122 | |||||||||||||||||||||
Total loans reported |
7,910 | 6,177 | 6,373 | 6,019 | 4,396 | 28 | 80 | |||||||||||||||||||||
Credit card loans securitized and
unconsolidated |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Total loans managed |
$ | 7,910 | $ | 7,794 | $ | 8,071 | $ | 7,683 | $ | 5,860 | 1 | 35 | ||||||||||||||||
NET
CHARGE-OFF RATES (a) |
||||||||||||||||||||||||||||
Wholesale retained loans |
1.84 | % | 2.31 | % | 1.93 | % | 1.19 | % | 0.32 | % | ||||||||||||||||||
Consumer retained loans |
5.56 | 4.60 | 4.79 | 4.69 | 3.61 | |||||||||||||||||||||||
Total retained loans reported |
4.46 | 3.85 | 3.84 | 3.52 | 2.51 | |||||||||||||||||||||||
Consumer loans managed |
5.56 | 5.08 | 5.29 | 5.20 | 4.12 | |||||||||||||||||||||||
Total loans managed |
4.46 | 4.29 | 4.30 | 4.00 | 2.98 | |||||||||||||||||||||||
Consumer loans managed excluding purchased
credit-impaired loans (b) |
6.61 | 6.05 | 6.29 | 6.18 | 4.90 | |||||||||||||||||||||||
Total loans managed excluding purchased
credit-impaired loans (b) |
5.03 | 4.84 | 4.85 | 4.51 | 3.36 | |||||||||||||||||||||||
Memo:
Average Retained Loans (a) |
||||||||||||||||||||||||||||
Wholesale loans reported |
$ | 211,599 | $ | 206,846 | $ | 217,952 | $ | 229,105 | $ | 238,689 | ||||||||||||||||||
Consumer loans reported |
506,949 | 428,964 | 440,376 | 456,292 | 471,918 | |||||||||||||||||||||||
Total loans reported |
718,548 | 635,810 | 658,328 | 685,397 | 710,607 | |||||||||||||||||||||||
Consumer loans managed |
506,949 | 514,416 | 526,393 | 540,709 | 557,537 | |||||||||||||||||||||||
Total loans managed |
718,548 | 721,262 | 744,345 | 769,814 | 796,226 |
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related; overall, $104.6 billion of related loans were recorded on-balance sheet. As a result of the consolidation of the credit card securitization trusts, reported and managed basis are equivalent for periods beginning after January 1, 2010. For further discussion, see page 38 of this Financial Supplement. | |
(b) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. To date, no charge-offs have been recorded for these loans. | |
N/A: Not Applicable. |
Page 32
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||
Beginning balance at January 1, |
$ | 31,602 | $ | 30,633 | $ | 29,072 | $ | 27,381 | $ | 23,164 | 3 | % | 36 | % | ||||||||||||||
Cumulative effect of change in accounting principles (a) |
7,494 | | | | | NM | NM | |||||||||||||||||||||
Beginning balance at January 1, adjusted |
$ | 39,096 | $ | 30,633 | $ | 29,072 | $ | 27,381 | $ | 23,164 | 28 | 69 | ||||||||||||||||
Net charge-offs (a) |
7,910 | 6,177 | 6,373 | 6,019 | 4,396 | 28 | 80 | |||||||||||||||||||||
Provision for loan losses (a) |
6,991 | 7,166 | 8,029 | 7,923 | 8,617 | (2 | ) | (19 | ) | |||||||||||||||||||
Other (b) |
9 | (20 | ) | (95 | ) | (213 | ) | (4 | ) | NM | NM | |||||||||||||||||
Ending balance |
$ | 38,186 | $ | 31,602 | $ | 30,633 | $ | 29,072 | $ | 27,381 | 21 | 39 | ||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR |
||||||||||||||||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||
Beginning balance at January 1, |
$ | 939 | $ | 821 | $ | 746 | $ | 638 | $ | 659 | 14 | 42 | ||||||||||||||||
Cumulative effect of change in accounting principles (a) |
(18 | ) | | | | | NM | NM | ||||||||||||||||||||
Beginning balance at January 1, adjusted |
$ | 921 | $ | 821 | $ | 746 | $ | 638 | $ | 659 | 12 | 40 | ||||||||||||||||
Provision for lending-related commitments |
19 | 118 | 75 | 108 | (21 | ) | (84 | ) | NM | |||||||||||||||||||
Ending balance |
$ | 940 | $ | 939 | $ | 821 | $ | 746 | $ | 638 | | 47 | ||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||
Wholesale |
||||||||||||||||||||||||||||
Asset specific (a) |
$ | 1,557 | $ | 2,046 | $ | 2,410 | $ | 2,108 | $ | 1,213 | (24 | ) | 28 | |||||||||||||||
Formula based |
4,385 | 5,099 | 5,631 | 6,284 | 6,691 | (14 | ) | (34 | ) | |||||||||||||||||||
Total wholesale |
5,942 | 7,145 | 8,041 | 8,392 | 7,904 | (17 | ) | (25 | ) | |||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Asset specific (c) |
1,010 | 996 | 1,009 | 801 | 546 | 1 | 85 | |||||||||||||||||||||
Formula
based (a) (d) (e) |
28,423 | 21,880 | 20,493 | 19,879 | 18,931 | 30 | 50 | |||||||||||||||||||||
Purchased
credit-impaired (e) |
2,811 | 1,581 | 1,090 | | | 78 | NM | |||||||||||||||||||||
Total consumer |
32,244 | 24,457 | 22,592 | 20,680 | 19,477 | 32 | 66 | |||||||||||||||||||||
Total allowance for loan losses |
38,186 | 31,602 | 30,633 | 29,072 | 27,381 | 21 | 39 | |||||||||||||||||||||
Allowance for lending-related commitments |
940 | 939 | 821 | 746 | 638 | | 47 | |||||||||||||||||||||
Total allowance for credit losses |
$ | 39,126 | $ | 32,541 | $ | 31,454 | $ | 29,818 | $ | 28,019 | 20 | 40 | ||||||||||||||||
REPORTED RATIOS |
||||||||||||||||||||||||||||
Wholesale allowance to total wholesale retained loans |
2.83 | % | 3.57 | % | 3.76 | % | 3.75 | % | 3.43 | % | ||||||||||||||||||
Consumer allowance to total consumer retained loans |
6.49 | 5.73 | 5.22 | 4.63 | 4.21 | |||||||||||||||||||||||
Allowance to total retained loans |
5.40 | 5.04 | 4.74 | 4.33 | 3.95 | |||||||||||||||||||||||
Consumer
allowance to retained nonperforming loans (f) (g) |
298 | 229 | 223 | 234 | 252 | |||||||||||||||||||||||
Consumer
allowance to retained nonperforming loans excluding credit card |
150 | 139 | 131 | 134 | 137 | |||||||||||||||||||||||
MANAGED RATIOS (a) |
||||||||||||||||||||||||||||
Consumer
allowance to total consumer retained loans excl. purchased
credit-impaired loans and loans held by the WaMu Master Trust (h) (i) |
7.05 | 6.63 | 6.21 | 5.80 | 5.20 | |||||||||||||||||||||||
Allowance to
loans excl. purchased credit-impaired loans and loans held
by the Washington Mutual Master Trust (h) (i) |
5.64 | 5.51 | 5.28 | 5.01 | 4.53 | |||||||||||||||||||||||
Allowance to
total retained nonperforming loans excluding purchased
credit-impaired loans (f) (h) (j) |
212 | 174 | 168 | 198 | 241 | |||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 2,601 | $ | 3,756 | $ | 4,703 | $ | 5,101 | $ | 4,682 | (31 | ) | (44 | ) | ||||||||||||||
Retail Financial Services (a) |
16,200 | 14,776 | 13,286 | 11,832 | 10,619 | 10 | 53 | |||||||||||||||||||||
Card Services (a) |
16,032 | 9,672 | 9,297 | 8,839 | 8,849 | 66 | 81 | |||||||||||||||||||||
Commercial Banking |
3,007 | 3,025 | 3,063 | 3,034 | 2,945 | (1 | ) | 2 | ||||||||||||||||||||
Treasury & Securities Services |
57 | 88 | 15 | 15 | 51 | (35 | ) | 12 | ||||||||||||||||||||
Asset Management |
261 | 269 | 251 | 226 | 215 | (3 | ) | 21 | ||||||||||||||||||||
Corporate/Private Equity |
28 | 16 | 18 | 25 | 20 | 75 | 40 | |||||||||||||||||||||
Total |
$ | 38,186 | $ | 31,602 | $ | 30,633 | $ | 29,072 | $ | 27,381 | 21 | 39 | ||||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related. As a result $7.4 billion, $14 million and $127 million of allowance for loan losses were recorded on-balance sheet associated with the Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits, and certain other consumer loan securitization entities, primarily mortgage-related, respectively. As a result of the consolidation of the credit card securitization trusts, reported and managed basis are comparable for periods beginning after January 1, 2010. For further discussion, see page 38 of this Financial Supplement. | |
(b) | Activity for the third and second quarters of 2009 predominantly included a reclassification related to the issuance and retention of securities from the Chase Issuance Trust. | |
(c) | The asset-specific consumer allowance for loan losses includes residential real estate troubled debt restructuring reserves of $754 million, $754 million, $756 million, $603 million and $380 million at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. Prior period amounts have been reclassified from formula-based to conform with the current period presentation. | |
(d) | Includes all of the Firms allowance for loan losses on credit card loans, including those for which the Firm has modified the terms of the loans for borrowers who are experiencing financial difficulty. | |
(e) | Prior period amounts have been reclassified from formula-based to conform with the current period presentation. | |
(f) | The Firms policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. Under guidance issued by the Federal Financial Institutions Examination Council, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier. | |
(g) | Excluding consumer purchased credit-impaired loans and the related allowance, the consumer allowance to retained nonperforming loans ratios would have been 272%, 215%, 212%, 234% and 252% at March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively. | |
(h) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. To date, no charge-offs have been recorded for these loans. | |
(i) | Excludes loans held by the Washington Mutual Master Trust, which were consolidated onto the Firms balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009, and June 30, 2009. | |
(j) | Excludes consumer purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. |
Page 33
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||
LOANS |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | (477 | ) | $ | (265 | ) | $ | 330 | $ | 815 | $ | 1,274 | (80 | )% | NM | % | ||||||||||||
Commercial Banking |
204 | 445 | 326 | 280 | 263 | (54 | ) | (22 | ) | |||||||||||||||||||
Treasury & Securities Services |
(31 | ) | 73 | 1 | (20 | ) | (20 | ) | NM | (55 | ) | |||||||||||||||||
Asset Management |
31 | 53 | 37 | 59 | 34 | (42 | ) | (9 | ) | |||||||||||||||||||
Corporate/Private Equity |
16 | (2 | ) | (6 | ) | 7 | | NM | NM | |||||||||||||||||||
Total wholesale |
(257 | ) | 304 | 688 | 1,141 | 1,551 | NM | NM | ||||||||||||||||||||
Retail Financial Services (a) |
3,735 | 4,228 | 4,004 | 3,841 | 3,877 | (12 | ) | (4 | ) | |||||||||||||||||||
Card Services reported (a) |
3,512 | 2,622 | 3,269 | 2,939 | 3,189 | 34 | 10 | |||||||||||||||||||||
Corporate/Private Equity |
1 | 12 | 68 | 2 | | (92 | ) | NM | ||||||||||||||||||||
Total consumer |
7,248 | 6,862 | 7,341 | 6,782 | 7,066 | 6 | 3 | |||||||||||||||||||||
Total provision for loan losses |
$ | 6,991 | $ | 7,166 | $ | 8,029 | $ | 7,923 | $ | 8,617 | (2 | ) | (19 | ) | ||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 15 | $ | 84 | $ | 49 | $ | 56 | $ | (64 | ) | (82 | ) | NM | ||||||||||||||
Commercial Banking |
10 | 49 | 29 | 32 | 30 | (80 | ) | (67 | ) | |||||||||||||||||||
Treasury & Securities Services |
(8 | ) | (20 | ) | 12 | 15 | 14 | 60 | NM | |||||||||||||||||||
Asset Management |
4 | 5 | 1 | | (1 | ) | (20 | ) | NM | |||||||||||||||||||
Corporate/Private Equity |
| (1 | ) | | | | NM | | ||||||||||||||||||||
Total wholesale |
21 | 117 | 91 | 103 | (21 | ) | (82 | ) | NM | |||||||||||||||||||
Retail Financial Services |
(2 | ) | 1 | (16 | ) | 5 | | NM | NM | |||||||||||||||||||
Card Services reported |
| | | | | | | |||||||||||||||||||||
Corporate/Private Equity |
| | | | | | | |||||||||||||||||||||
Total consumer |
(2 | ) | 1 | (16 | ) | 5 | | NM | NM | |||||||||||||||||||
Total provision for lending-related commitments |
$ | 19 | $ | 118 | $ | 75 | $ | 108 | $ | (21 | ) | (84 | ) | NM | ||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||
Investment Bank (a) |
$ | (462 | ) | $ | (181 | ) | $ | 379 | $ | 871 | $ | 1,210 | (155 | ) | NM | |||||||||||||
Commercial Banking |
214 | 494 | 355 | 312 | 293 | (57 | ) | (27 | ) | |||||||||||||||||||
Treasury & Securities Services |
(39 | ) | 53 | 13 | (5 | ) | (6 | ) | NM | NM | ||||||||||||||||||
Asset Management |
35 | 58 | 38 | 59 | 33 | (40 | ) | 6 | ||||||||||||||||||||
Corporate/Private Equity |
16 | (3 | ) | (6 | ) | 7 | | NM | NM | |||||||||||||||||||
Total wholesale |
(236 | ) | 421 | 779 | 1,244 | 1,530 | NM | NM | ||||||||||||||||||||
Retail Financial Services (a) |
3,733 | 4,229 | 3,988 | 3,846 | 3,877 | (12 | ) | (4 | ) | |||||||||||||||||||
Card Services reported (a) |
3,512 | 2,622 | 3,269 | 2,939 | 3,189 | 34 | 10 | |||||||||||||||||||||
Corporate/Private Equity |
1 | 12 | 68 | 2 | | (92 | ) | NM | ||||||||||||||||||||
Total consumer |
7,246 | 6,863 | 7,325 | 6,787 | 7,066 | 6 | 3 | |||||||||||||||||||||
Total provision for credit losses |
7,010 | 7,284 | 8,104 | 8,031 | 8,596 | (4 | ) | (18 | ) | |||||||||||||||||||
Credit card loans securitized and unconsolidated (a) |
N/A | 1,617 | 1,698 | 1,664 | 1,464 | NM | NM | |||||||||||||||||||||
Managed provision for credit losses (a) |
$ | 7,010 | $ | 8,901 | $ | 9,802 | $ | 9,695 | $ | 10,060 | (21 | ) | (30 | ) | ||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new FASB guidance which amended the accounting
for the transfer of financial assets and the consolidation of VIEs. Upon adoption of the new
guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts,
Firm-administered multi-seller conduits and certain other consumer loan securitization
entities, primarily mortgage-related. As a result of the consolidation of the credit card
securitization trusts, reported and managed basis are comparable for periods beginning after
January 1, 2010. For further discussion, see page 38 of this Financial Supplement. N/A: Not Applicable. |
Page 34
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
AVERAGE IB TRADING VAR, CREDIT PORTFOLIO VAR AND OTHER VAR - 95% CONFIDENCE LEVEL |
||||||||||||||||||||||||||||
IB VaR by risk type: |
||||||||||||||||||||||||||||
Fixed income |
$ | 69 | $ | 121 | $ | 182 | $ | 179 | $ | 158 | (43 | )% | (56 | )% | ||||||||||||||
Foreign exchange |
13 | 14 | 19 | 16 | 23 | (7 | ) | (43 | ) | |||||||||||||||||||
Equities |
24 | 21 | 19 | 50 | 97 | 14 | (75 | ) | ||||||||||||||||||||
Commodities and other |
15 | 17 | 23 | 22 | 20 | (12 | ) | (25 | ) | |||||||||||||||||||
Diversification benefit to IB trading VaR (a) |
(49 | ) | (62 | ) | (97 | ) | (97 | ) | (108 | ) | 21 | 55 | ||||||||||||||||
IB Trading VaR (b) |
72 | 111 | 146 | 170 | 190 | (35 | ) | (62 | ) | |||||||||||||||||||
Credit portfolio VaR (c) |
19 | 24 | 29 | 68 | 86 | (21 | ) | (78 | ) | |||||||||||||||||||
Diversification benefit to IB trading and credit portfolio VaR (a) |
(9 | ) | (11 | ) | (32 | ) | (60 | ) | (63 | ) | 18 | 86 | ||||||||||||||||
Total IB trading and credit portfolio VaR |
82 | 124 | 143 | 178 | 213 | (34 | ) | (62 | ) | |||||||||||||||||||
Consumer Lending VaR (d) |
25 | 29 | 49 | 43 | 108 | (14 | ) | (77 | ) | |||||||||||||||||||
Chief Investment Office (CIO) VaR (e) |
70 | 78 | 99 | 111 | 121 | (10 | ) | (42 | ) | |||||||||||||||||||
Diversification benefit to total other VaR (a) |
(13 | ) | (19 | ) | (31 | ) | (29 | ) | (61 | ) | 32 | 79 | ||||||||||||||||
Total other VaR |
82 | 88 | 117 | 125 | 168 | (7 | ) | (51 | ) | |||||||||||||||||||
Diversification benefit to total IB and other
VaR (a) |
(66 | ) | (67 | ) | (82 | ) | (89 | ) | (93 | ) | 1 | 29 | ||||||||||||||||
Total IB and other VaR (f) |
$ | 98 | $ | 145 | $ | 178 | $ | 214 | $ | 288 | (32 | ) | (66 | ) | ||||||||||||||
(a) | Average VaRs were less than the sum of the VaRs of their market risk components, which is due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves. | |
(b) | IB Trading VaR includes predominantly all trading activities in IB, as well as syndicated lending facilities that the Firm intends to distribute; however, particular risk parameters of certain products are not fully captured, such as correlation risk. IB Trading VaR does not include the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. | |
(c) | Credit Portfolio VaR includes the derivative credit valuation adjustments (CVA), hedges of the CVA and mark-to-market hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VaR does not include the retained loan portfolio. | |
(d) | Consumer Lending VaR includes the Firms mortgage pipeline and warehouse, MSR and all related hedges. | |
(e) | Chief Investment Office (CIO) VaR includes positions, primarily in debt securities and credit products, used to manage structural risk and other risks, including interest rate, and credit risks arising from the Firms ongoing business activities. | |
(f) | Total IB and other VaR excludes certain nontrading activity, such as Private Equity, principal investing (e.g., mezzanine financing, tax-oriented investments, etc.), balance sheet and capital management positions and longer-term corporate investments managed by the CIO. |
Page 35
March 31, 2010 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Mar 31 | ||||||||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||||||
CAPITAL RATIOS (a) |
||||||||||||||||||||||||||||
Tier 1 capital |
$ | 131,402 | (e) | $ | 132,971 | $ | 126,541 | $ | 122,174 | $ | 137,144 | (1 | )% | (4 | )% | |||||||||||||
Total capital |
173,417 | (e) | 177,073 | 171,804 | 167,767 | 183,109 | (2 | ) | (5 | ) | ||||||||||||||||||
Tier 1 common capital (b) |
103,960 | (e) | 105,284 | 101,420 | 96,850 | 87,878 | (1 | ) | 18 | |||||||||||||||||||
Risk-weighted assets |
1,147,483 | (e) | 1,198,006 | 1,237,760 | 1,260,237 | 1,207,490 | (4 | ) | (5 | ) | ||||||||||||||||||
Adjusted average assets |
1,981,060 | (e) | 1,933,767 | 1,940,689 | 1,969,339 | 1,923,186 | 2 | 3 | ||||||||||||||||||||
Tier 1 capital ratio |
11.5 | %(e) | 11.1 | % | 10.2 | % | 9.7 | % | 11.4 | % | ||||||||||||||||||
Total capital ratio |
15.1 | (e) | 14.8 | 13.9 | 13.3 | 15.2 | ||||||||||||||||||||||
Tier 1 common capital ratio (b) |
9.1 | (e) | 8.8 | 8.2 | 7.7 | 7.3 | ||||||||||||||||||||||
Tier 1 leverage ratio |
6.6 | (e) | 6.9 | 6.5 | 6.2 | 7.1 | ||||||||||||||||||||||
TANGIBLE COMMON EQUITY (PERIOD-END) (c) |
||||||||||||||||||||||||||||
Common stockholders equity |
$ | 156,569 | $ | 157,213 | $ | 154,101 | $ | 146,614 | $ | 138,201 | | 13 | ||||||||||||||||
Less: Goodwill |
48,359 | 48,357 | 48,334 | 48,288 | 48,201 | | | |||||||||||||||||||||
Less: Other intangible assets |
4,383 | 4,621 | 4,862 | 5,082 | 5,349 | (5 | ) | (18 | ) | |||||||||||||||||||
Add: Deferred tax liabilities (d) |
2,544 | 2,538 | 2,527 | 2,535 | 2,502 | | 2 | |||||||||||||||||||||
Total tangible common equity |
$ | 106,371 | $ | 106,773 | $ | 103,432 | $ | 95,779 | $ | 87,153 | | 22 | ||||||||||||||||
TANGIBLE COMMON EQUITY (AVERAGE) (c) |
||||||||||||||||||||||||||||
Common stockholders equity |
$ | 156,094 | $ | 156,525 | $ | 149,468 | $ | 140,865 | $ | 136,493 | | 14 | ||||||||||||||||
Less: Goodwill |
48,542 | 48,341 | 48,328 | 48,273 | 48,071 | | 1 | |||||||||||||||||||||
Less: Other intangible assets |
4,307 | 4,741 | 4,984 | 5,218 | 5,443 | (9 | ) | (21 | ) | |||||||||||||||||||
Add: Deferred tax liabilities (d) |
2,541 | 2,533 | 2,531 | 2,518 | 2,609 | | (3 | ) | ||||||||||||||||||||
Total tangible common equity |
$ | 105,786 | $ | 105,976 | $ | 98,687 | $ | 89,892 | $ | 85,588 | | 24 | ||||||||||||||||
INTANGIBLE ASSETS (PERIOD-END) |
||||||||||||||||||||||||||||
Goodwill |
$ | 48,359 | $ | 48,357 | $ | 48,334 | $ | 48,288 | $ | 48,201 | | | ||||||||||||||||
Mortgage servicing rights |
15,531 | 15,531 | 13,663 | 14,600 | 10,634 | | 46 | |||||||||||||||||||||
Purchased credit card relationships |
1,153 | 1,246 | 1,342 | 1,431 | 1,528 | (7 | ) | (25 | ) | |||||||||||||||||||
All other intangibles |
3,230 | 3,375 | 3,520 | 3,651 | 3,821 | (4 | ) | (15 | ) | |||||||||||||||||||
Total intangibles |
$ | 68,273 | $ | 68,509 | $ | 66,859 | $ | 67,970 | $ | 64,184 | | 6 | ||||||||||||||||
DEPOSITS (PERIOD-END) |
||||||||||||||||||||||||||||
U.S. offices: |
||||||||||||||||||||||||||||
Noninterest-bearing |
$ | 210,982 | $ | 204,003 | $ | 195,561 | $ | 192,247 | $ | 197,027 | 3 | 7 | ||||||||||||||||
Interest-bearing |
436,914 | 439,104 | 415,122 | 433,862 | 463,913 | | (6 | ) | ||||||||||||||||||||
Non-U.S. offices: |
||||||||||||||||||||||||||||
Noninterest-bearing |
10,062 | 8,082 | 9,390 | 8,291 | 7,073 | 24 | 42 | |||||||||||||||||||||
Interest-bearing |
267,345 | 287,178 | 247,904 | 232,077 | 238,956 | (7 | ) | 12 | ||||||||||||||||||||
Total deposits |
$ | 925,303 | $ | 938,367 | $ | 867,977 | $ | 866,477 | $ | 906,969 | (1 | ) | 2 | |||||||||||||||
(a) | The Federal Reserve granted the Firm, for a period of 18 months following the merger with Bear Stearns, relief up to a certain specified amount and subject to certain conditions, from the Federal Reserves risk-based capital and leverage requirements, with respect to the Bear Stearns risk-weighted assets and other exposures acquired. The relief would have ended, by its terms, on September 30, 2009. Commencing in the second quarter of 2009, the Firm no longer adjusted its risk-based capital ratios to take into account the relief in the calculation of its risk-based capital ratios as of June 30, 2009. | |
(b) | The Tier 1 common ratio is Tier 1 common capital divided by risk-weighted assets. Tier 1 common capital (Tier 1 Common) is defined as Tier 1 capital less elements of capital not in the form of common equity such as perpetual preferred stock, noncontrolling interest in subsidiaries and trust preferred capital debt securities. Tier 1 common capital, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. | |
(c) | Tangible common equity (TCE) represents common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm views TCE, a non-GAAP financial measure, as a meaningful measure of capital quality. | |
(d) | Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in non-taxable transactions, which are netted against goodwill and other intangibles when calculating TCE. | |
(e) | Estimated. |
Page 36
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
1Q10 Change | ||||||||||||||||||||||||||||
1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q09 | 1Q09 | ||||||||||||||||||||||
EARNINGS PER SHARE DATA |
||||||||||||||||||||||||||||
Basic earnings per share: |
||||||||||||||||||||||||||||
Income before extraordinary gain |
$ | 3,326 | $ | 3,278 | $ | 3,512 | $ | 2,721 | $ | 2,141 | 1 | % | 55 | % | ||||||||||||||
Extraordinary gain |
| | 76 | | | | | |||||||||||||||||||||
Net income |
3,326 | 3,278 | 3,588 | 2,721 | 2,141 | 1 | 55 | |||||||||||||||||||||
Less: Preferred stock dividends |
162 | 162 | 163 | 473 | 529 | | (69 | ) | ||||||||||||||||||||
Less:
Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury (a) |
| | | 1,112 | | | | |||||||||||||||||||||
Net income applicable to common equity |
3,164 | 3,116 | 3,425 | 1,136 | 1,612 | 2 | 96 | |||||||||||||||||||||
Less: Dividends and undistributed earnings allocated
to participating securities |
190 | 164 | 185 | 64 | 93 | 16 | 104 | |||||||||||||||||||||
Net income applicable to common stockholders |
$ | 2,974 | $ | 2,952 | $ | 3,240 | $ | 1,072 | $ | 1,519 | 1 | 96 | ||||||||||||||||
Total weighted-average basic shares outstanding |
3,970.5 | 3,946.1 | 3,937.9 | 3,811.5 | 3,755.7 | 1 | 6 | |||||||||||||||||||||
Income
before extraordinary gain per share (a) |
$ | 0.75 | $ | 0.75 | $ | 0.80 | $ | 0.28 | $ | 0.40 | | 88 | ||||||||||||||||
Extraordinary gain per share |
| | 0.02 | | | | | |||||||||||||||||||||
Net income per share (a) |
$ | 0.75 | $ | 0.75 | $ | 0.82 | $ | 0.28 | $ | 0.40 | | 88 | ||||||||||||||||
Diluted earnings per share: |
||||||||||||||||||||||||||||
Net income applicable to common stockholders |
$ | 2,974 | $ | 2,952 | $ | 3,240 | $ | 1,072 | $ | 1,519 | 1 | 96 | ||||||||||||||||
Total weighted-average basic shares outstanding |
3,970.5 | 3,946.1 | 3,937.9 | 3,811.5 | 3,755.7 | 1 | 6 | |||||||||||||||||||||
Add: Employee stock options and SARs (b) |
24.2 | 28.0 | 24.1 | 12.6 | 3.0 | (14 | ) | NM | ||||||||||||||||||||
Total weighted-average diluted shares outstanding (c) |
3,994.7 | 3,974.1 | 3,962.0 | 3,824.1 | 3,758.7 | 1 | 6 | |||||||||||||||||||||
Income
before extraordinary gain per share (a) |
$ | 0.74 | $ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | | 85 | ||||||||||||||||
Extraordinary gain per share |
| | 0.02 | | | | | |||||||||||||||||||||
Net income per share (a) |
$ | 0.74 | $ | 0.74 | $ | 0.82 | $ | 0.28 | $ | 0.40 | | 85 | ||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||||
Common shares outstanding at period end (d) |
3,975.4 | 3,942.0 | 3,938.7 | 3,924.1 | 3,757.7 | 1 | 6 | |||||||||||||||||||||
Cash dividends declared per share |
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | | | ||||||||||||||||
Book value per share |
39.38 | 39.88 | 39.12 | 37.36 | 36.78 | (1 | ) | 7 | ||||||||||||||||||||
Dividend payout |
7 | % | 7 | % | 6 | % | 14 | % | 15 | % | ||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||
High |
$ | 46.05 | $ | 47.47 | $ | 46.50 | $ | 38.94 | $ | 31.64 | (3 | ) | 46 | |||||||||||||||
Low |
37.03 | 40.04 | 31.59 | 25.29 | 14.96 | (8 | ) | 148 | ||||||||||||||||||||
Close |
44.75 | 41.67 | 43.82 | 34.11 | 26.58 | 7 | 68 | |||||||||||||||||||||
Market capitalization |
177,897 | 164,261 | 172,596 | 133,852 | 99,881 | 8 | 78 | |||||||||||||||||||||
STOCK REPURCHASE PROGRAM |
||||||||||||||||||||||||||||
Common shares repurchased |
| | | | | | |
(a) | The calculation of second quarter 2009 earnings per share includes a one-time non-cash reduction of $1.1 billion, or $0.27 per share, resulting from the redemption of Series K preferred stock issued to the U.S. Treasury. | |
(b) | Excluded from the computation of diluted EPS (due to the antidilutive effect) were options issued under employee benefit plans and warrants originally issued under the U.S. Treasurys Capital Purchase Program to purchase shares of the Firms common stock totaling 239 million, 147 million, 241 million, 315 million, and 363 million, for the quarters ended March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, and March 31, 2009, respectively. | |
(c) | Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the calculation using the treasury stock method. | |
(d) | On June 5, 2009, the Firm issued $5.8 billion, or 163 million shares, of its common stock at $35.25 per share. |
Page 37
(a) | In addition to analyzing the Firms results on a reported basis, management analyzes the Firms results and the results of the lines of business on a managed basis, which is a non-GAAP financial measure. For 2010 and 2009, the Firms definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue and net interest income for the Firm (and each of the business segments) on a tax-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits is presented in the managed results on a basis equivalent to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. | |
Effective January 1, 2010, the Firm adopted new FASB guidance that required the Firm to consolidate its Firm-sponsored credit card securitization trusts. The income, expense and credit costs associated with these securitization activities are now recorded in the 2010 Consolidated Statements of Income in the same classifications as for credit card loans that were not securitized. As a result of the consolidation of the securitization trusts, reported and managed basis are equivalent for periods beginning after January 1, 2010. Prior to January 1, 2010 the Firms managed basis presentation also included certain reclassification adjustments that assumed credit card loans securitized by Card Services remained on the Consolidated Balance Sheet. JPMorgan Chase previously used this concept of managed basis to evaluate the credit performance and overall financial performance of the entire managed credit card portfolio. Operations were funded and decisions were made about allocating resources, such as employees and capital, based on managed financial information. In addition, the same underwriting standards and ongoing risk monitoring are used for both loans on the Consolidated Balance Sheet and securitized loans. Although securitizations result in the sale of credit card receivables to a trust, JPMorgan Chase retained the ongoing customer relationships, as the customers may continue to use their credit cards; accordingly, the customers credit performance affects both the securitized loans and the loans retained on the Consolidated Balance Sheet. JPMorgan Chase believed that this managed basis information was useful to investors, as it enabled them to understand both the credit risks associated with the loans reported on the Consolidated Balance Sheet and the Firms retained interests in securitized loans. | ||
(b) | The allowance for loan losses to end-of-period loans excludes purchased credit-impaired loans and loans from the Washington Mutual Master Trust, which were consolidated on the Firms balance sheet at fair value during the second quarter of 2009. Additionally, Real Estate Portfolios net charge-off rates exclude the impact of purchased credit-impaired loans. The allowance for loan losses applicable to these loans was $2.8 billion at March 31, 2010. |
(c) | Tier 1 common capital (Tier 1 Common) is defined as Tier 1 capital less elements of capital not in the form of common equity such as perpetual preferred stock, noncontrolling interest in subsidiaries and trust preferred capital debt securities. Tier 1 common capital, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. | |
(d) | TSS Firmwide revenue includes certain TSS product revenue and liability balances reported in other lines of business, mainly CB, RFS and AM, related to customers who are also customers of those lines of business. | |
(e) | Pretax margin represents income before income tax expense divided by total net revenue, which is, in managements view, a comprehensive measure of pretax performance derived by measuring earnings after all costs are taken into consideration. It is, therefore, another basis that management uses to evaluate the performance of TSS and AM against the performance of their respective competitors. | |
(f) | Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Bankings CDI amortization expense related to prior business combination transactions. | |
(g) | The calculation of the second quarter 2009 earnings per share and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE and ROTCE for the second quarter of 2009 would have been 6% and 10%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods. | |
(h) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of variable interest entities (VIEs); (3) cash and securities segregated and on deposit for regulatory and other purposes; (4) goodwill and intangibles; (5) securities received as collateral; and (6) investments purchased under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. The amount of adjusted assets is presented to assist the reader in comparing IBs asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. IB believes an adjusted asset amount that excludes the assets discussed above, which were considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. |
Page 38
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1. | Investment banking fees include advisory, equity underwriting, bond underwriting and loan syndication fees. | |
2. | Fixed income markets include client and portfolio management revenue related to both market-making and proprietary risk-taking across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets. | |
3. | Equities markets include client and portfolio management revenue related to market-making and proprietary risk-taking across global equity products, including cash instruments, derivatives and convertibles. | |
4. | Credit portfolio revenue includes net interest income, fees and loan sale activity, as well as gains or losses on securities received as part of a loan restructuring, for the IBs credit portfolio. Credit portfolio revenue also includes the results of risk management related to the Firms lending and derivative activities, and changes in the credit valuation adjustment, which is the component of the fair value of a derivative that reflects the credit quality of the counterparty. |
1. | Personal bankers Retail branch office personnel who acquire, retain and expand new and existing customer relationships by assessing customer needs and recommending and selling appropriate banking products and services. | |
2. | Sales specialists Retail branch office personnel who specialize in the marketing of a single product, including mortgages, investments, and business banking, by partnering with the personal bankers. |
1. | Production revenue includes net gains or losses on originations and sales of prime and subprime mortgage loans, other production-related fees and losses related to the repurchase of previously-sold loans. | |
2. | Net mortgage servicing revenue |
a) | Operating revenue comprises: all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees and other ancillary fees; and modeled servicing portfolio runoff (or time decay). | ||
b) | Risk management comprises: changes in MSR asset fair value due to market-based inputs such as interest rates and volatility, as well as updates to assumptions used in the MSR valuation model; and derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in the market-based inputs to the MSR valuation model. |
1. | Retail Borrowers who are buying or refinancing a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties. | |
2. | Wholesale A third-party mortgage broker refers loan applications to a mortgage banker at the Firm. Brokers are independent loan originators that specialize in finding and counseling borrowers but do not provide funding for loans. The Firm exited the broker channel during 2008. | |
3. | Correspondent Banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm. | |
4. | Correspondent negotiated transactions (CNT) These transactions occur when mid- to large-sized mortgage lenders, banks and bank-owned mortgage companies sell servicing to the Firm on an as-originated basis, and exclude purchased bulk servicing transactions. These transactions supplement traditional production channels and provide growth opportunities in the servicing portfolio in stable and rising-rate periods. |
1. | Sales volume Dollar amount of cardmember purchases, net of returns. | |
2. | Open accounts Accounts on file with charging privileges. | |
3. | Merchant acquiring business A business that processes bank card transactions for merchants. | |
4. | Bank card volume Dollar amount of transactions processed for merchants. | |
5. | Total transactions Number of transactions and authorizations processed for merchants. |
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1. | Middle Market Banking covers corporate, municipal, financial institution and not-for-profit clients, with annual revenue generally ranging between $10 million and $500 million. | |
2. | Mid-Corporate Banking covers clients with annual revenue generally ranging between $500 million and $2 billion and focuses on clients that have broader investment banking needs. | |
3. | Commercial Term Lending primarily provides term financing to real estate investors/owners for multi-family properties as well as financing office, retail and industrial properties. | |
4. | Real Estate Banking provides full-service banking to investors and developers of institutional-grade real estate properties. |
1. | Lending includes a variety of financing alternatives, which are primarily provided on a basis secured by receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures and leases. | |
2. | Treasury services includes a broad range of products and services enabling clients to transfer, invest and manage the receipt and disbursement of funds, while providing the related information reporting. These products and services include U.S. dollar and multi-currency clearing, ACH, lockbox, disbursement and reconciliation services, check deposits, other check and currency-related services, trade finance and logistics solutions, commercial card, and deposit products, sweeps and money market mutual funds. | |
3. | Investment banking products provide clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through loan syndications, investment-grade debt, asset-backed securities, private placements, high-yield bonds, equity underwriting, advisory, interest rate derivatives, foreign exchange hedges and securities sales. |
1. | Liability balances include deposits and deposits that are swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. | |
2. | IB revenue, gross Represents total revenue related to investment banking products sold to CB clients. |
1. | Liability balances include deposits and deposits that are swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. |
1. | Institutional brings comprehensive global investment services including asset management, pension analytics, asset/liability management and active risk budgeting strategies to corporate and public institutions, endowments, foundations, not-for-profit organizations and governments worldwide. | |
2. | Retail provides worldwide investment management services and retirement planning and administration through third-party and direct distribution of a full range of investment vehicles. | |
3. | The Private Bank addresses every facet of wealth management for ultra-high-net-worth individuals and families worldwide, including investment management, capital markets and risk management, tax and estate planning, banking, capital raising and specialty-wealth advisory services. | |
4. | Private Wealth Management offers high-net-worth individuals, families and business owners in the United States comprehensive wealth management solutions, including investment management, capital markets and risk management, tax and estate planning, banking, and specialty-wealth advisory services. | |
5. | JPMorgan Securities provides investment advice and wealth management services to high-net-worth individuals, money managers, and small corporations. |
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